The purchase of the UK’s biggest microchip producer by a Chinese-controlled company has been cleared to go ahead by a review which found no reason for ministers to intervene on national security grounds.
The final decision on the £63m takeover of Newport Wafer Fab by Nexperia rests with business secretary Kwasi Kwarteng, who has not yet given his approval. Sources told The Independent he might still use his powers under the National Security and Investment Act to block the sale.
But the development has sparked alarm among senior Conservative MPs who fear Beijing being handed control of strategic national assets.
The review by national security adviser Stephen Lovegrove was ordered by Boris Johnson last year after concerns were raised over the sale of the Welsh semiconductor manufacturer, whose chips are an essential component of electronic devices.
News of the takeover by Nexperia, a Dutch subsidiary of the Chinese technology company Wingtech, sparked calls for Kwarteng to intervene last spring.
The former head of the National Cyber Security Centre, Ciaran Martin, said the takeover presented a bigger threat to the UK than Huawei’s involvement in 5G.
And former Australian PM Tony Abbott, who is a UK government trade adviser, said that the sale “would not go ahead were it happening in Australia”.
An initial review by the deputy national security adviser found last year that there was no case for intervention, as Newport Wafer Fab uses technology already available to China.
But Lovegrove was asked to conduct a further assessment of whether the sale should be blocked under the National Security and Investment Act , which last year introduced new powers for ministers to intervene in foreign takeovers of companies central to the national interest.
His decision that there is no need to act dismayed MPs concerned about increasing Chinese control of UK assets.
Tom Tugendhat, the chair of the House of Commons Foreign Affairs Committee, told the Politico website: “It’s not clear why we haven’t used our new powers under the National Security and Investment Act to fully review the takeover of one of our leading compound semiconductor companies.
“This is an area where China is sinking billions to compete. The government has no clear strategy to protect what’s left of our semiconductor industry.”
And former Conservative leader Iain Duncan Smith said the decision was “ridiculous.”
“Kwasi Kwarteng needs to stand up for access to key technologies in the West which China is determined to get control over,” he said.
“If the government goes down this road, it will become yet another step in the pathetic process of appeasing China who right now is supporting Russia and plans to pose a direct and deliberate threat to the West’s access to microchips and other key components for electronic equipment.”
A government spokesperson said: “The government is considering the case and no decisions have been made.”
