Nexperia acquisition twist affirms Washington's undue influence over British decisions
A year ago, the Chinese-owned, Holland-based technology firm Nexperia completed the acquisition of Britain's Newport Wafer Fab, a Welsh semiconductor facility.
The company, which was running at a loss, manufactures 200nm wafer chips, which are used in household and everyday goods such as toasters and calculators.
Although some anti-China figures objected to the initial takeover, Prime Minister Boris Johnson approved the deal and publicly stated that he did not want to "scare Chinese investment away with a pitchfork."
Of course, his assessment was correct, as the takeover posed no threat to British national security, not least because the technology involved was not strategic or even cutting-edge.
One might assume that was the case closed. But with the United States, that's never the case. As the Wall Street Journal reported, the US has relentlessly pressed Downing Street to reverse the acquisition, and as a result, despite the takeover having long been completed, the business secretary has now triggered a "national security review" over the takeover, which could reverse an already completed deal.
This story should ring a bell, as the UK government reversed its approval of Huawei's participation in Britain's 5G infrastructure in early 2020, despite having previously greenlighted it as safe. The deciding factor is exactly the same: the United States, demonstrating Britain's obvious lack of sovereignty in determining what is in its "national interest" and what is not.
The United States is pursuing a multifaceted semiconductor strategy that aims to maintain a global political monopoly over the entire industry and supply chain in order to isolate and leverage China.
To accomplish this, the US has strong-armed leading semiconductor firms to build new capacity in America and allied countries, restrict the flow of advanced semiconductor-manufacturing equipment to China, and, most importantly, attempted to use extraterritorial jurisdiction to veto, block and undermine legitimate takeovers of semiconductor firms by China overseas.
For example, Washington used its Foreign Investment Committee to veto China's acquisition of South Korean firm Magnachip, a demand Seoul agreed to.
As a result, the United States will inevitably oppose Nexperia's takeover of the Newport Wafer Fab. Even though the deal has been long done and approved for some time, as it was with Huawei, Washington does not take "no" for an answer, especially in its dealings with the United Kingdom, and has clearly put pressure on Downing Street to reverse course and veto the deal. Britain has a history of capitulating, when it comes to these kinds of issues, even when its actual national interests are clear.
Hence beyond simply following what the US wants, there is actually little rationale why Britain should do so.
First and foremost, the semiconductor technology involved is outdated and incapable of serving any military or sensitive purposes, making the national security claim a lie. If the UK vetoes the deal, as it did with Huawei, expect a very flimsy and political justification.
Second, as previously stated, the company is losing money and is not competitive (due to limited technology), relying on subsidies from the Welsh devolved government.
Third, reorienting the company toward the Chinese market, which is the world's largest for semiconductor, would bring it enormous success and boost British exports.
Yet quite clearly, the US sees undermining Chinese investments in Britain under the guise of demanding "transatlantic solidarity" as also serving its commercial interests.
The Wall Street Journal has reported that a US firm is also "lining up" to take over the plant if Nexperia is pushed out, demonstrating how America is exploiting anti-China sentiment to pursue a monopoly over the global semiconductor supply chain. It remains to be seen how US ownership will make the company any more profitable.
Should Britain go ahead and veto this agreement, it will only demonstrate once again that its foreign policy is completely subservient to the US and, as a result, fails to recognize where its true national interests lie.
Although Boris Johnson has long spoken of a "global Britain" and "independence" from the European Union, in reality, it is Washington that is wielding undue influence over British decisions and continuing to undermine business and investment that benefits the British economy in pursuit of its own hegemonic and commercial goals.
(The author, a postgraduate student of Chinese studies at Oxford University, is a South Korea-based English analyst on international relations. The views are his own.)