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Prime Minister Boris Johnson urged to set tough rules on Chinese deals

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Ministers must take a stand on whether Chinese corporations must be allowed to snap up British tech firms, influential think-tank urges

  • Policy Exchange: PM must set out role China-backed firms can play in UK 
  • Report comes as Business Secretary weighs takeover of Newport Wafer Fab
  • NWF makes high-tech computer chips and is one in every of few British firms in industry
  • It attracted attention after lockdowns in China caused global shortage of chips

Ministers must take a stand on whether Chinese corporations must be allowed to snap up British tech firms, an influential think-tank has urged. 

The Policy Exchange, founded by former Tory MPs Nick Boles, Francis Maude and Archie Norman, said Boris Johnson must urgently set out the role that China-backed firms can play in industries vital to national security. 

The think-tank’s report, written by industrial expert Sir Geoffrey Owen, comes as Business Secretary Kwasi Kwarteng is weighing the takeover of Newport Wafer Fab (NWF) by Chinese-owned Nexperia. 

Decision time: The Policy Exchange said Boris Johnson must urgently set out the role that China-backed firms can play in industries vital to national security

NWF makes high-tech computer chips, utilized in products for corporations including Dyson and Bosch. It’s one in every of the few British firms within the industry. 

But NWF has attracted attention after lockdowns in China caused a worldwide shortage of computer chips. 

Tory MP Tom Tugendhat, chairman of Parliament’s foreign affairs committee, has said it’s ‘absolutely baffling’ that the sale of NWF has not yet been blocked on national security grounds.

In today’s report, Owen concluded that there was little point investing heavily to make the chip industry self-sufficient. But he said there have been security concerns over allowing the UK’s mental property to be scooped up by a potentially ‘hostile power’. 

Owen said: ‘Semiconductors will play an increasingly vital role, not only as an integral part for other industries but additionally as a driver of progress in emerging technologies; additionally they make a vital contribution to national security.’ 

Chips have many uses within the military, he said, and can turn out to be integral to businesses. There have been also several convincing reasons to dam the NWF takeover, Owen added. 

He said Chinese ownership of Britain’s two principal chip-making plants in Newport and Manchester could make the country ‘a less trusted partner within the eyes of key countries’. 

And ‘the defence-related technologies on which NWF has been working will pass into the hands of a hostile power’. 

Nexperia’s backer Wingtech could also shut down NWF’s UK manufacturing and shift it to Shanghai, he added. 

Owen said: ‘The Government should construct on the industry’s strengths, encourage latest entrants and help them to scale up.’

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