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UK blocks sale of chip design software company to China
Trail from Super Orange HK Holding Ltd leads back to National Integrated Circuit Industry Investment Fund
The UK government has blocked the sale of a British chip design software outfit to a Chinese company, citing national security. The move is the latest step the government has taken in its increasingly defensive stance against foreign ownership of UK technology companies.
Business secretary Kwasi Kwarteng announced the decision in an official notice posted on the website of the Department for Business, Energy and Industrial Strategy (BEIS) this week.
The brief notice states that the Business Secretary made the final order under the National Security and Investment Act 2021 (NSIA), which came into force at the start of this year. This has the effect of preventing the sale of Pulsic Limited, based in Bristol, to Super Orange HK Holding Limited, which was angling to acquire the entire share capital of Pulsic.
Pulsic is an electronic design automation (EDA) company that makes floorplanning, placement, and routing tools that are used in the design and development of the circuit layouts for chips. The company says that its products are suitable for "extreme design challenges at advanced nodes."
In the official notice, BEIS states that the sale was considered a potential risk to national security because the tools developed by Pulsic and the expertise contained within qualify as dual-use technologies, meaning they could be used in the creation of "cutting-edge integrated circuits that could be used in a civilian or military supply chain."
Many technologies might meet such a dual-use criteria, so why Pulsic's chip design software is considered such a security threat is unclear, unless the reason is simply that the UK government – like its US counterpart – sees the development of an advanced semiconductor industry in China as a threat in itself.
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However, Bloomberg reports that Super Orange HK Holding Ltd was founded in Hong Kong only last year by a company called Nanjing Puxin Software, which in turn appears to be wholly owned by Shanghai UniVista Industrial Software Group, a company backed by China's National Integrated Circuit Industry Investment Fund.
This is a state-owned investment vehicle founded in 2014 to drive the development of China's semiconductor industry, and known in China as "The Big Fund."
Although the National Security and Investment Act only came into force at the start of this year, the UK government has already invoked it for several cases involving overseas investment in UK technology companies.
It is investigating the increasing ownership of BT shares by French teleco tycoon Patrick Drahi, who is now the UK telco's largest shareholder. Also under review is the acquisition of Newport Wafer Fab, the country's largest chipmaking facility, by Nexperia, a Dutch company that is in turn owned by a Chinese corporation.
The British government also reportedly considered using the NSIA to persuade SoftBank to list chip designer Arm on the London stock exchange as part of its public offering, and last month blocked the University of Manchester from licensing robot vision technology to a Chinese company. ®