UK Rejects Chinese Plea Over Divest Order For Scottish Chip Firm

A national security decision by the UK government has been backed by the High Court of Justice in London, after it ruled in its favour.

The High Court rejected an appeal from a Chinese-owned organisation, for a temporary injunction on a government order requiring it to sell its stake in Scottish chip design business FTDI, which describes itself as a USB bridging solutions specialist.

It comes after the UK government in November 2024 had made a high profile intervention over the Chinese 80.2 percent stake in the Scottish firm.

Injunction rejected

The British government three months ago had issued a “notice of final order” that China-registered Future Technology Devices International Holding Ltd must sell 80.2 percent of Glasgow-based chip company FTDI due to national security risks.

The government was concerned about the transfer of UK-developed semiconductor technology and IP to China, as well as the potential for FTDI’s ownership to be used to disrupt critical national infrastructure.

The government noted that on 7 December 2021, FTDI Holding Limited had gained control of FTDI by increasing the percentage of shares held from less than 75 percent to 75 percent or more – this was a “trigger event” that began an investigation under section 8(2)(c) of the National Security and Investment Act.

Three years after this, the Chancellor of the Duchy of Lancaster imposed a final divest order, but China-based Future Technology Devices International Holding Ltd appealed for an injunction, which has now been rejected by the UK High Court.

FTDI Holding Limited is now required to produce a draft disposal plan within 30 days.

Who is FTDI?

Founded back in 1992, FTDI is a privately held fabless semiconductor device company that describes itself as a USB bridging solutions specialist.

It is headquartered in Glasgow, and has R&D facilities in that Scottish city as well as Singapore, as well as regional sales and technical support sites in Glasgow, Tigard (Oregon, USA) and Shanghai (China).

The firm develops, manufactures, and supports devices and their related cables and software drivers – specialising in USB, and also offers application-specific integrated circuit (ASIC) design services, and consultancy services for electronic devices.

In December 2023 it responded after the supply of certain of its products into heavily sanctioned Russia.

It said at the time it was “deeply concerned about potential findings associated with FTDI.”

National security

The British government has been cracking down on ownership of domestic chip firms by foreign entities based in countries not friendly to the UK and the West in general, as evidenced by its intervention over the sale of Newport Wafer Fab (NWF).

More recently in September 2024 the UK’s Ministry of Defence acquired a chip factory in Newton Aycliffe, County Durham, responsible for making semiconductors for the defence industry.

The factory had been at risk of being closed down or sold after Apple had dropped the business as a supplier, removing a key slice of its revenues.

The MoD acquired the plant from its previous parent, US-based Coherent, and the facility is now known as Octric Semiconductors UK.