Government Orders National Security Review Of Perpetuus Purchase

The British government has ordered a national security review into the takeover of Swansea-based graphene maker Perpetuus Group.

British Business Secretary Kwasi Kwarteng ordered the UK competition watchdog, the Competition and Markets Authority (CMA) to complete a national security review into the takeover of Perpetuus Group by either Taurus International or Dr Zhongfu Zhou, or any enterprise associated with him or the company.

It comes as the British government has made a number of recent interventions in the tech space to examine acquisitions of British entities by foreign organisations.

Graphene importance

Graphene has been described as a wonder-material, and is the thinnest and lightest known supermaterial.

Essentially, Graphene is a sheet-like, two-dimensional material with a thickness of one carbon atom, and is the most conductive substance yet discovered.

The government has long funded research into the material, which was first produced by researchers at the University of Manchester in 2004.

The researchers won a Nobel prize for their discovery.

A variety of potential applications have been developed for graphene, including as a possible replacement for silicon as the primary material in electronic devices.

Other applications include defence and medical products.

National security

Founded in 2013, Perpetuus is a tiny company based in Wales, and has 14 employees and makes less than a million pound a year.

But now business Secretary Kwarteng instructed the CMA to review the planned takeover of Perpetuus Group by Taurus International or any companies associated with Dr Zhongfu Zhou.

First off, who is Dr Zhongfu Zhou?

Well, it seems he actually works at Perpetuus.

Dr Zhou is listed as “chief nanotechnology scientist” on Perpetuus’s website, and he has spent years working on the wonder material. He is recognised as one of the worlds leading authorities in the respect of 2D material applications.

After graduating from the University of Science and Technology in Beijing, he went on to study a PhD in materials science at Oxford University and then became a research associate at Cardiff University in Wales.

He then moved to Aberystwyth University in 2010 to work for the Department of Physics and the Centre for Advanced Functional Materials and Devices.

However he also has business interests in China, as he is also the managing director of the Inner Mongolia Industrial Research Institute for Composite Materials, a company based in northern China.

The other potential buyer of Perpetuus Group is Taurus International, which is a new company that was only founded in October 2020. Its registered office is said to be a semi-detached residential property in southeast London.

The Competition and Markets Authority has until 7 February 2021 to submit a report to the government.

The UK government declined to comment on the specific reasons behind the national security intervention, but its intervention has been welcomed in some quarters.

“I’m pleased to see the government being more active in responding to national security concerns over takeovers,” Tom Tugendhat MP, who leads the China Research Group, was quoted as saying by CNBC.

“Graphene, like many other UK innovations, offers the possibility of an extraordinary future and it’s essential that sensitive technology stays with trusted partners,” Tugendhat reportedly said.

Perpetuus and Zhou did not immediately respond to a CNBC request for comment.

Other interventions

The intervention comes just a few months after the UK government ordered a national security review of another Chinese takeover.

In July this year, it emerged that Welsh chip maker Newport Wafer Fab (NWF) was to be acquired by Dutch chip firm Nexperia, which in turn is owned by Chinese firm Wingtech.

As soon as the Nexperia acquisition was announced, national security concerns were immediately raised by Tom Tugendhat MP.

Just a couple of days after that concern was voiced, Prime Minister Boris Johnson ordered a review of the acquisition of Newport Wafer Fab.

A bit later it emerged that Newport Wafer Fab has over a dozen UK government research contracts.

And at least one of contracts involves developing chip technology for a radar system that would be used in fighter jets.

Meanwhile the UK competition watchdog is also investigating Nvidia’s $40 billion bid for Cambridge-based ARM, whose chip designs are used by chip manufacturers around the world.

That investigation was launched in January, and the government in April voiced its own national security concerns, despite the fact that Nvidia is an American firm.