U.K.’s National Security and Investment Act 2021 identified risks associated with UK-developed semiconductor technology and intellectual property.
A couple of days back, the U.K. government mandated a China-registered firm divest its 80.2 percent stake in Future Technology Devices International Limited (FTDI), a semiconductor company headquartered in Glasgow. This decision followed a national security assessment under the National Security and Investment Act 2021, which identified risks associated with UK-developed semiconductor technology and intellectual property potentially being used in ways contrary to U.K. national security interests.
FTDI, established in 1992, specializes in developing semiconductor solutions and has research and development facilities in Glasgow and Singapore, along with sales and technical support sites in the USA and Shanghai. The government’s intervention reflects ongoing concerns about foreign ownership of critical technology assets and their implications for national security.
The Act empowers the government to impose conditions on or block acquisitions and investments that could threaten national security. In this instance, the government’s assessment concluded that the holding company’s significant share in FTDI could compromise national security interests, leading to the order for divestment. The company must sell its stake within a specified timeframe and through a designated process to ensure compliance with the Act and mitigate any potential security concerns.
The point to be noted is that the U.K. government’s decision to mandate the divestment of Nexperia’s stake in Newport Wafer Fab was driven by concerns that British-developed semiconductor technology and associated intellectual property could be utilized in ways detrimental to national security. Nexperia, a company ultimately majority-owned by Chinese nationals, acquired the Newport facility in 2021. Given the strategic importance of semiconductors in defense and critical infrastructure, the U.K. government assessed that foreign control over such technology posed unacceptable risks.
After this incident, the U.K. government established the National Protective Security Authority (NPSA) in March 2023 as part of MI5, the U.K.’s domestic intelligence service. NPSA’s mission is to assist businesses and organizations in defending against national security threats, including state-sponsored attempts to steal sensitive research and information.
In recent years, the U.K. and U.S. governments have imposed significant restrictions on exporting semiconductor technology to China due to national security concerns. In 2023, the U.K. government significantly tightened its policies on semiconductor exports to China, rejecting most export license applications from companies aiming to send these technologies to Chinese markets. This move aligns with the U.K.’s growing focus on protecting critical technologies from potential misuse.
Similarly, in 2022, the U.S. Commerce Department implemented strict export controls targeting “advanced” semiconductor chips and related technologies. These restrictions limit China’s access to high-performance chips, which could be utilized in military applications, advanced artificial intelligence, and other dual-use technologies.
