By Tom Fowdy
Last week the British government announced a cancellation of the takeover of the Newport Wafer fab by the Netherlands-based chip firm Nexperia, which is owned by a Chinese company. The government claims that the annulment is because of "national security concerns" having already been subject to a review. The review had been proposed since April, however, it was delayed over six months due to the leadership crisis in the British government, wherein a series of scandals and disastrous policies brought down the administrations of Boris Johnson and Liz Truss.
The review was in fact the second of its kind too. The first was a year ago, wherein the deal was in fact approved. The decisive factor was to nobody's surprise, the pressure of the United States government, which demanded as part of their technological containment push against China, that Britain block the investment. The US routinely forces its allies around the world to block Chinese semiconductor investments and takeovers, even if the company in question has no high-end or military-use products. The Newport Wafer Fab, of course, doesn't.
The United States is seeking to take control of the entire global semiconductor chain in its favor in the bid to squeeze China. This has included increasingly sweeping and large-scale sanctions and embargos on China's own technology industry and companies, the vetoing of investments as set out above and the application of billions in subsidies directed towards forcibly reshoring manufacturing. Across the board, the US is tearing up the global supply chain and rebuilding one around itself. The US sees the domination of high-end technology as the fundamental key to military and strategic hegemony.
The United Kingdom, however, is hardly part of this game. Beyond the Japanese-owned ARM, the United Kingdom is not a serious player in the global semiconductor supply chain precisely because the country long made the political design to destroy its industrial base in favor of extreme free market policies in the 1980s and 1990s. The Newport Wafer fab is not a globally competitive or consequential firm. A business that has long been running at a loss and dependent upon regional subsidies, it only makes 180-200nm wafers which can be used only for simple devices such as household appliances.
It has no relevance whatsoever to global titans such as TSMC or Samsung, and cannot be used for the products the US identifies in its "strategic competition" against China which have included artificial intelligence, leading-edge node chips, quantum chips and chips with military or dual node usage. When looked at it from this angle, the premise that the takeover of the firm constitutes a "national security threat" is a complete lie, and it also represents the 2nd time in which the UK has U-turned on a critically important Chinese investment upon facing US pressure, when they had already approved it and said it was safe. This behavior runs completely contrary to the way and rules in which a free-market economy professes to operate, and damages the credibility of the British government.
The decision to veto the takeover of the firm has also attracted significant domestic opposition. The company's staff association wrote a letter to the government saying: "We are in disbelief that you have decided to order Nexperia to sell their semiconductor factory in Newport. We are also angry that your decision might imply that a member of our team may, in some obscure way, undermine the UK's national security. The company also criticized the decision, further noting: "More than 500 employees in Newport also raised their own significant concerns about such a divestment - the government has chosen not to listen to them and instead taken this decision which puts the livelihoods of them and their families, as well as more than £100m of taxpayers' money, completely unnecessarily at risk".
Since having left the European Union in the name of "Brexit", the UK government has used the phrase "global Britain"- However, as the Newport Wafer saga shows, and likewise with 5G, the United Kingdom is repeatedly undermining and cutting off its own nose to spite its face, in appeasement of American preferences. The UK desperately wants a trade with the United States, but the highly protectionist "America first" status quo, shows no interest in doing so. Britain is happy to put anything on the altar of Washington D.C to try and get such, even to the point it is willing to undermine jobs, investment and opportunities with one of its most critical trade and investment partners: China. This was a short-sighted, geopolitically motivated and costly decision that has put America first and British workers last.
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.
Read more articles by Tom Fowdy:
Opinion | China's diplomatic offensive, and a mini-detente
Opinion | Has the high-tide of Ukraine passed?
Opinion | How one fake story illustrates the West's ignorance of China
Comment