UK Orders Chinese Owner to Sell Scottish Chip Company

Chancellor of the Duchy of Lancaster Pat McFadden speaking during the Labour Party Conference in Liverpool, England, on Sept. 22, 2024. Peter Byrne/PA Wire

The UK government has ordered a China-linked entity to undo its acquisition of a Scottish chip company, the Cabinet Office said on Wednesday.

The FTDI Holding Limited, which was set up by owners with ties to China in 2021 to buy 80.2 percent shares of Future Technology Devices International Limited (FTDI), was told to sell the shares “within a specified period and by following a specified process.”

The Chancellor of the Duchy of Lancaster Pat McFadden, the cabinet member responsible for national security and resilience, made the decision based on national security reasons, the Cabinet Office said.

The order took effect on Tuesday.

The acquisition went though in December 2021, a month before the government gained new power under the National Security and Investment Act to scrutinize and intervene in the acquisition of companies in 17 sensitive industries.

The $414 million (£321 million) investment came under the government’s radar a year ago when the company was accused of selling dual-use technologies to Russia after its invasion of Ukraine.

At the time, the company responded by saying it didn’t not violate applicable UK government sanctions and export control laws in force, and that it doesn’t support any use of its components to violate human rights.

FTDI is a fab-less semiconductor company headquartered in Glasgow, with part of its research and development team based in Singapore.

It’s a world-leading company in USB bridging and cables, which have a wide range of applications including communications, consumer electronics, industrial control, and automotive.

According to Chinese investment platform uSMART, FTDI Holding Limited is ultimately owned by the China-based entities Shenzhen Huapengfei Supply Chain Co. Ltd and Beijing chip investment fund JAC Capital, and an individual named Zhu Xu.

In the notice of final order published on Wednesday, the Cabinet Office said the order was issued to mitigate national security risks in relation to “UK-developed semiconductor technology and associated intellectual property being deployed in ways that are contrary to UK national security,” and “the ownership of FTDI being used to pose a risk to critical national infrastructure which uses FTDI products.”

Since January 2022, the UK government has blocked or imposed conditions on more than 20 foreign acquisitions of companies involving dual use goods, British critical infrastructure, and other national security-related goods and technologies.

In November 2022, former Business Secretary Grant Shapps ordered Chinese-owned Nexperia to sell at least 86 percent of shares of the UK’s largest chip plant, previously named Newport Wafer Fab.

In another case, Shapps imposed restrictions on what information can be shared in the takeover of a China-linked shell company to protect the UK National Grid.

FTDI didn’t immediately respond to The Epoch Times’ request for comment.