Opinion | Britain's semiconductor U-turn shows subservience to US interests

By Tom Fowdy

One year ago the Chinese owned, Netherlands based, technology firm Nexperia completed a takeover of Britain's Newport Wafer Fab, a semiconductor facility based in Wales. The firm, which was running at a loss, produces 200nm wafter chips which are used for household and everyday goods such as toasters, calculators and so on, having no strategic significance. Although the initial takeover was met with objections by some anti-China figures, Prime Minister Boris Johnson allowed the deal to pass and publicly commented that he did not want to "scare Chinese investment away with a pitchfork". His assessment of course was correct, the takeover posed no harm to British National Security not least because the technology involved was not strategic or even leading in its field.

One might assume that was case closed. But with the United States, that's never the case. Determined to force Britain to change course, the Wall Street Journal reported that the US has relentlessly placed pressure on Downing Street to U-turn the acquisition, and as a result despite the takeover having long been completed, it was reported that the business secretary has now triggered a "national security review" over the takeover, which could reverse an already completed deal. This story should sound familiar, as similarly in early 2020 the UK government similarly reversed its approval of Huawei's participation in Britain's 5G infrastructure despite having previously green lighted it at safe. The deciding factor is exactly the same: The United States, illustrating the clear lack of sovereignty Britain has in determining what is in its "national interest" and what is not.

The United States is pursuing a multifaceted semiconductor strategy which aspires to maintain a global political monopoly over the entire industry and supply chain, with the view to isolating and exerting strategic leverage over China with it. To do this, the US has strongarmed leading semiconductor firms towards building new capacity in America and allied countries (such as SMIC and Samsung) has sought to restrict the flow of advanced semiconductor manufacturing equipment to China and most crucially, has sought to utilize extra-territorial jurisdiction in order to veto, block and undermine legitimate takeovers of semiconductor firms by China overseas. As one recent example, Washington used their committee on foreign investment to veto China's acquisition of South Korean firm Magnachip, a demand Seoul acquiesced to.

As a result, it is inevitable that the United States consistently opposes Nexperia's takeover of the Newport Wafer Fab. Even though the deal is long done and approved, as it were with Huawei and nuclear power Washington does not take "no" as an answer, especially in its dealings with the United Kingdom, and has clearly put pressure on Downing Street to U-turn and veto the deal. Britain has a history of continually capitulating when it comes to these kinds of things, even when it is very clear where its actual national interests lie.

Hence beyond simply following what the US wants, there is actually little rationale why Britain should do so. First of all, the Semiconductor technology involved is aged and cannot serve any kind of military or sensitive purposes, making the national security claim a lie. If the UK does veto the deal, as they did with Huawei, one should expect a very flimsy and political excuse. Secondly, as stated above, the firm is running at a loss and is not competitive (owing to its limited technology), relying on subsidies from the Welsh devolved government. Thirdly, the reorientation of the firm towards the Chinese market, the world's largest for semiconductors, would bring it immense success and boost British exports.

Yet quite clearly, the United States also sees undermining Chinese investments in Britain under the misleading guise of demanding "transatlantic solidarity" as also suiting its commercial interests too. The Wall Street Journal reports that conveniently, and coincidentally, a US firm is also "lined up" to takeover the plant in the event in which Nexperia is pushed out, showing how America is exploiting anti-China sentiment to pursue monopoly over the global semiconductor supply chain. Yet it remains to be seen how US ownership could make the firm any more profitable.

Should Britain ultimately go ahead and veto this deal, it will only demonstrate again that its foreign policy is completely subservient to the United States and in doing so, fails to appreciate where its true national interests lie. Although Boris Johnson has long spoke of a "global Britain" and "independence" from the European Union, in reality it is Washington who is exerting undue influence over Britain's decisions, and continuing to undermine business and investment of which brings clear benefits to the British economy, in pursuit of its own hegemonic and commercial ends.

The author is a well-seasoned writer and analyst with a large portfolio related to China topics, especially in the field of politics, international relations and more. He graduated with an Msc. in Chinese Studies from Oxford University in 2018.

The views do not necessarily reflect those of DotDotNews.

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