Government blocks Chinese purchase of UK electronics firm over security concerns
Pulsic's software and intellectual property may be used to develop technical or defence capabilities, government says
The UK government has blocked Hong Kong firm Super Orange from buying Bristol-based electronic design company Pulsic, citing national security risks.
A statement released on Wednesday, Britain's Business Secretary Kwasi Kwarteng said he believes that the final order is essential and appropriate to mitigate the risk to national security.
The decision has been taken in accordance with the National Security and Investment Act 2021, which was passed at the beginning of the year and gives the government the authority to examine and intervene in commercial dealings to safeguard national security.
"The Secretary of State considers that a risk to national security arises from the application of the intellectual property, knowledge, processes and techniques for the software for the electronic design automation (EDA) products, to facilitate the building of cutting-edge integrated circuits that could be used in a civilian or military supply chain," the statement says.
The Department for Business, Energy, and Industrial Strategy (BEIS) said that Pulsic's software and intellectual property may be leveraged to develop technical or defence capabilities.
In a "civilian or military supply chain," Pulsic's products might enable the building of "cutting-edge integrated circuits," it added.
Pulsic, which specialises in Precision Design Automation, has offices in Bristol, San Jose, Newcastle and Tokyo. It was established in 2000 and supplies components to the top semiconductor manufacturers worldwide. The company claims that its hand-crafted quality is delivered faster than manual design or general-purpose software solutions.
Super Orange HK Holding Limited is controlled by Shanghai UniVista Industrial Software Group, according to Chinese corporate data and Hong Kong public filings.
Commenting on the UK government's decision, the Chinese embassy in London said that UK's business climate and long-term interests would be harmed by any abuse of the national security review.
Kwarteng's decision, no doubt, reflects the UK's growing aversion to Chinese investment in its economy. The relations between the two nations have recently deteriorated over issues related to human rights, defence and security.
Last month, the Government prohibited the University of Manchester from granting a Chinese firm a licence for its vision-sensing technology. The Chinese firm would have been able to develop, test, produce, use and sell licenced products had it acquired the IP.
The government is also currently reviewing a Chinese-backed takeover of Newport Wafer Fab (NWF). Earlier this year, Kwarteng ordered an investigation into the acquisition of NWF by the Chinese firm Nexperia, on national security grounds.
NWF is the biggest semiconductor manufacturing facility in the UK. Given that NWF has several contracts with the UK government, including for defence-related projects, any potential acquisition is very sensitive. The review might result in the government blocking the deal, or demanding changes.
Liz Truss, favourite for the Conservative leadership, has said that Beijing's growing aggressiveness is a serious security concern for the UK.
"We should look at making sure we're not exporting technology that can be used against us," Truss said on Wednesday.
"We need to clear investment screening, and we've developed that to make sure that we can't have acquisitions of key strategic assets," she added.