UK Government again refuses to intervene in Chinese takeover of Welsh microchip firm 

130721 Wafer fab

The UK Government says that it does not plan to intervene in the takeover of a Welsh microchip firm by a Chinese-owned company, despite a review of the deal ordered by the prime minister.

But several MPs warned ministers that the takeover could pose a security risk with one senior Conservative describing the situation as "an unholy mess."Under the deal, said to be worth £63m, Wafer Fab, which is based in Newport, would be sold to a Dutch semiconductor firm, Nexperia, which is in turn owned by a Chinese technology business.It had previously been welcomed by the sector and the Welsh Government for securing 400 jobs and the UK Government’s Welsh Secretary said ministers in London were “satisfied” by security checks.But there have been increasingly vocal concerns raised about the possible security risks of the agreement and the prime minister sought to allay those fears when he told MPs that he had asked his National Security Adviser, Sir Stephen Lovegrove, to “look again” at the sale.

He also claimed that the Welsh Government had “rather sweetly” called for the review. The Welsh Government denies making any such request.

Tom Tugendhat said China had a " track record of using foreign investments to gain access to important technologies and information." Credit: PA

In a report earlier this week, the chair of the Foreign Affairs Committee, Tom Tugendhat said: "Our fiercest competitors, notably China, have a track record of using foreign investments to gain access to important technologies and information."We've witnessed too many of our country's brilliant tech firms disappear abroad with potentially significant economic and foreign policy implications."

Today, Business minister Amanda Solloway told the Commons the Government did have the power to intervene in takeovers and mergers if they were of national security concern.But she said this was not currently the case for Newport Wafer Fab.She said: “The Government has been in close contact with Newport Wafer Fab but it does not consider it appropriate to intervene in this case at the current time. We will continue to monitor the situation closely and, as part of this, the Prime Minister has asked the national security adviser to review this case.“Separately, work is under way to review the wider semi-conductor landscape in the United Kingdom. As I am sure the House will appreciate, I will not be able to comment on the detail of commercial transactions or of any national security assessment on a particular case.”

Former Tory leader Iain Duncan Smith said the deal should have been blocked

The former Conservative leader, Sir Iain Duncan Smith said that "the government is in an unholy mess over this. 

"I wonder in the course of this failure to make a decision, did they look at what China thinks of semiconductors? 

"China is the biggest exporter in the world and is busy buying up semiconductor technology, everywhere it can find it. 

"They have identified semiconductor technology as one of the key areas that they need to dominate globally, and they are busy stealing technology, getting other people's intellectual property rights, and buying up companies.

"And the idea that a semiconductor is not strategic: when the technology in there will be used in almost everything we do, everything we produce that is electronic.

"My simple case is: are we now in the position of a kind of project kowtow where we simply say, we just have to do business with the Chinese, no matter what?

"We should have blocked this deal."