Republicans press Biden over Chinese deal for British chip factory

A special congressional task force aimed at countering threats from China is calling on the Biden administration to block the proposed sale of Britain’s largest microchip factory to a Chinese company, a firm that U.S. lawmakers say has close ties to the ruling Communist Party in Beijing.

In a letter to President Biden this week, the Republican-led China Task Force warned of security risks tied to the proposed takeover of Newport Wafer Fab (NWF) — a key player in Britain’s semiconductor industry — by Nexperia, a Dutch-based semiconductor maker which was bought by China-based Wingtech Technology. The U.S. lawmakers described the new parent company as essentially a “state-owned enterprise” of the People’s Republic of China (PRC).

“This matter requires urgent action,” the lawmakers wrote. “We urge your administration to employ all tools necessary to prevent this outcome, including engaging in direct diplomacy with the UK government, reconsidering the UK’s status on the Committee on Foreign Investment in the United States (CFIUS) ’white list,’ and restricting exports to NWF.”

The April 19 letter was signed by China Task Force Chairman Rep. Michael McCaul, Texas Republican, along with House GOP Rep. Mike Gallagher of Wisconsin, Michael Waltz of Florida, Guy Reschenthaler of Pennsylvania, Robert J. Wittman of Virginia, Neal Dunn of Florida, Mark Green and Diana Harshbarger of Tennessee, and Young Kim of California.

The task force is composed entirely of Republicans because Democrats, who control a majority in the House, refused to participate when the body was created in 2020.

There has been no immediate reaction from the Biden administration to this week’s letter, although the deal has made headlines in the U.S. and Britain. The BBC described Nexperia as being “Chinese-owned,” despite having its headquarters in the Netherlands.

After Politico reported earlier this month that British authorities had quietly approved the sale of NWF to Nexperia, the BBC reported that Secretary of State for Business, Energy and Industrial Strategy Kwasi Kwarteng “can, and still might, intervene.”

“Any such move by Kwasi Kwarteng, over concerns of key UK infrastructure falling into Chinese hands, would be under the [UK government’s] National Security and Investment Act,” the news outlet reported on April 1, adding that Prime Minister Boris Johnson asked his national security adviser to examine the buyout last year.

In its letter to Mr. Biden, the Republican-led China Task Force asserted that the British government “recently created an investment review regime under the National Security and Investment Act to provide oversight and scrutiny of precisely this kind of transaction.”

“The PRC’s attempt to acquire NWF serves as a critical test case of the UK’s willingness to exercise its new authorities to address a shared security concern regarding critical technology,” wrote the lawmakers, who said the Biden administration could take action via CFIUS, a multi-agency executive branch arm within the U.S. Treasury Department that has the power to review business deals with national security implications.

CFIUS, which is perhaps best known for examining foreign entities’ takeovers or purchases of U.S. companies for national security questions, maintains an elite “white list” of “excepted foreign states” whose investments in the U.S. economy are exempt from certain scrutiny standards. Britain is one of just four countries on the list, along with Australia, Canada and New Zealand.

The House China Task Force suggested that could change if the British government allows the NFW-Nexperia deal to go through.

“Given that the CFIUS ’white list’ was established under the premise that exempted countries would maintain their own equivalent investment safeguards, any approval of the NWF deal would necessarily call into question the fidelity of the UK’s entire review process,” the lawmakers wrote.