China’s offer for Newport Wafer Fab condemn condemn by MP Iain Duncan Smith

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Former Labor and Pensions Secretary Iain Duncan Smith delivers a speech at the Vote Leave Campaign headquarters on May 10, 2016 in London, England.

Jack Taylor | Getty Images

LONDON – A UK lawmaker believes China is using questionable methods to ensure it becomes a world leader in semiconductor technology.

Iain Duncan Smith, MP and former chairman of the Conservative Party, told the UK Parliament on Thursday that China has identified semiconductor technology as a key area it intends to dominate the world over. The industry is currently led by Taiwan, South Korea and the USA, in which the chip manufacturers TSMC, Samsung and Intel are located.

China is “I’m busy stealing technology, getting other people’s intellectual property rights, and buying businesses,” said Duncan Smith.

The Chinese government did not immediately respond to a CNBC request for comment. In the past, it has firmly denied allegations of stealing intellectual property.

In November 2018, China’s Commerce Department spokesman Gao Feng reportedly said it was hearsay that China was stealing intellectual property from the United States.

Earlier this year, China imposed sanctions on a number of British organizations and individuals, including Duncan Smith, who is a vocal critic of China.

Critical chip manufacturers

Chips are used to power everything from parking sensors in cars to sophisticated missile systems, but they’re scarce right now and nations are taking steps to make sure they have enough of them.

On July 5, the Chinese company Nexperia confirmed that it intends to buy Newport Wafer Fab, the UK’s largest chip maker.

NWF, which employs around 450 people in Newport, Wales, manufactures the wafers on which electronic circuits are printed. While Nexperia is headquartered in the Netherlands, it is owned by Wingtech Technologies in China.

Several other European chip companies – including the British Imagination Technologies, the French Linxens and the Dutch company Ampleon – have been sold to state-supported Chinese companies in recent years, according to analyzes.

The UK government initially said it had no plans to intervene in the Newport Wafer Fab acquisition, but last Wednesday Prime Minister Boris Johnson said the deal is under review by National Security Advisor Stephen Lovegrove.

“We need to assess whether the material they are making has real value and intellectual property interest to China, whether it has any real security implications,” said Johnson.

While a review is due to go ahead, UK Commerce Secretary Amanda Solloway reiterated Thursday that the government is not planning to intervene at this point as it is not currently a national security risk.

“It is true that commercial transactions are primarily a matter for the parties involved,” she said. “The government has been in close contact with Newport Wafer Fab but does not consider it appropriate at this stage to intervene in this case.”

Duncan Smith said he believed the government was in “imperfect mess” over the deal.

“I wonder if you looked at what China thought of semiconductors in the wake of this missing decision?” he asked. “China is the busiest exporter in the world and buys semiconductor technology everywhere it can find it.”

National Security and Investment Act

A new bill known as the National Security and Investment Bill was passed in April and Duncan Smith believes the government should have used the bill to block the acquisition of Newport Wafer Fab.

“Are we now in some kind of Kowtow project where we just say we just have to do business with the Chinese no matter what?” he said.

In the past decade the UK has sold many of its most innovative companies to overseas buyers.

Widely regarded as the global leader in AI, the London-based artificial intelligence laboratory DeepMind was sold to Google in the US in 2014, while the Cambridge-based chip designer Arm was sold to the Japanese SoftBank in 2016.

SoftBank is currently in the process of selling Arm to California-headquartered Nvidia for $ 40 billion, despite competition authorities around the world considering the deal.