UK orders Chinese biz to sell majority stake in Scottish chipmaker

The British government has ordered a China-owned entity to sell its stake in a Scottish chip company under the authority of the National Security and Investment Act 2021.

Glasgow-based Future Technology Devices International (FTDI) Limited is a fabless semiconductor biz with a range of chips and modules listed on its website, most of which appear to be fairly innocuous. The company is said to specialize in USB technology.

However, FTDI also provides application-specific integrated circuit (ASIC) design services, plus consultancy services, and claims to have agreements with the world's leading semiconductor foundries.

According to a British government notification, an entity known as FTDI Holding Limited (FTDIHL) gained control of FTDI Limited on December 7, 2021, by increasing the percentage of shares it held to 75 percent or more.

FTDIHL is listed at Companies House as a dormant company registered in Britain, but is not trading or earning any income. It has two active directors who share the same UK correspondence address but are listed as Chinese nationals, also residing in China.

The move by FTDIHL to gain control of FTDI Limited was regarded as a "trigger event" for investigation under section 8(2)(c) of the National Security and Investment Act 2021, the government says.

Following a detailed security assessment, the decision was taken by the Chancellor of the Duchy of Lancaster to impose an order on FTDIHL to sell 80.2 percent of FTDI Limited "within a specified period and by following a specified process."

The Chancellor of the Duchy of Lancaster is the highest-ranking minister in the British Cabinet Office after the Prime Minister. The current holder of the post is Pat McFadden MP.

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In its notification of the action, the government said the order will mitigate dangers related 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."

We asked the Cabinet Office for further information relating to this decision, but it simply referred us to the published notification. We also asked FTDI Limited for its reaction, and will update if we get an answer.

The government has invoked the National Security and Investment Act multiple times since it came into force in 2022. Perhaps the most notable case was to force the sale of the Newport Wafer Fab semiconductor facility in South Wales after it was acquired by Dutch-based Nexperia, owned by Chinese company Wingtech Technology.

It also stepped in to stop a Chinese company from licensing robot vision technology developed by the University of Manchester, and conducted an investigation when French telco billionaire Patrick Drahi became the largest shareholder in telecoms giant BT, but in that case decided no action was required. ®