Is Britain’s new investment law a hostile act to escalate the global technology war with China?
- Recently enacted National Security and Investment Act has given the British government the ability to block more deals on national security grounds, similar to the US
- Business Secretary Kwasi Kwarteng has used new powers to block deals by Chinese and Hong Kong companies. He is also reviewing other China-linked transactions
More than a year ago, the Dutch semiconductor maker Nexperia took full ownership of Britain’s largest, home-grown semiconductor producer Newport Wafer Fab, after agreeing to buy the remaining stake it did not own for £63 million (US$75 million).
Nexperia, with more than 14,000 people on staff globally, proclaimed the purchase of financially strapped Newport and its 500 employees as complementing its existing manufacturing sites in the United Kingdom and in Germany and as a key cog in expansion plans to meet the “growing global demand for semiconductors.”
The Newport takeover is one of several high-profile deals now caught in limbo under a law enacted earlier this year that gave the British government powers similar to the Committee on Foreign Investment in the United States (CFIUS) to block foreign takeovers, including the ability to retroactively end such deals.
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“The expectation is that the government will be more likely to intervene in transactions under this new regime,” Glenn Hall, a partner at Nelson Rose Fulbright in London said in a recent client note.
“The vast majority of transactions reviewed under the new regime are expected to be cleared without needing remedies,” Hall added. “Despite this, the new regime is far-reaching with serious consequences for non-compliance and requires parties to transactions in a much wider range of situations to engage with a potential national security review than under the previous Enterprise Act regime.”