Chinese firm ordered to sell stake in Glasgow chip business

The UK Government has ordered a company registered in China to sell its majority stake in a Scottish semiconductor manufacturer for national security reasons.

Feite Holdings, a division of Beijing Jianguang Asset Management, acquired an 80.2 percent stake in Glasgow-based Future Technology Devices International (FTDI) for $414 million in February 2022.

Founded in 1992 by Fred Dart, FTDI is a manufacturer of Universal Serial Bus (USB) technology, such as cables and peripheral chips that help connect older electrical products to modern computers.

It has research and development sites in Glasgow and Singapore, as well as regional and technology support facilities in Oregon, USA and Shanghai, China.

The effective acquisition of the group two years ago came just after the National Security and Investment Act of 2021 was enacted.

This legislation allows the Government to review and intervene in commercial agreements, such as mergers and acquisitions, in the interest of national security.

Following a review, the Chancellor of the Duchy of Lancaster had ordered an entity called FTDI Holding to sell its stake in FTDI “within a specified period and following a specified process”.

He said this would reduce the dangers of UK-produced microchip technology and affiliated intellectual property being “implemented in a manner contrary to UK national security”.

The government also said a sale would protect the company’s products from “being used to pose a risk to critical national infrastructure.”

Since it came into force, the NSI Act has been invoked on numerous occasions in relation to Chinese-owned companies purchasing British companies.

A prominent example was Nexperia’s purchase of an 86 percent stake in Newport Wafer Fab, a large semiconductor manufacturing plant in Wales.

Nexperia is headquartered in Nijmegen, the Netherlands, but is a subsidiary of Wingtech Technology, a partially state-owned Chinese group.

Concerned that the deal could seriously impact the UK’s ability to produce microchips, Nexperia ended up selling its stake in the site to US electronics giant Vishay.

Two other deals the Government has blocked include Super Orange’s purchase of Bristol-based electronics designer Pulsic and the University of Manchester’s licensing of robotic vision technology to Beijing Infinite Vision Technology.