Technology Cold War Begins, US Bans FAB Sales To China

The effort to want China to acquire chip and technology companies has met with resistance from the US. (photo: unsplash)

JAKARTA – The Chinese government is seeking to acquire ownership of the UK's largest computer chip design and manufacturing facility known as the "fab", for a "cheap" USD 87 million (approximately IDR 1.258 trillion) this week.

Under the deal, Beijing is said to be seeking control over the fab, and as much of their technology as possible, in stages. But in selling the fab, Britain called the United States not fulfilling its responsibilities as a democratic ally. This marks the resumption of the technological cold war between the US and China.

"This transaction highlights the need for the UK to more closely coordinate investment reviews with the US to align our security interests", Michael Wessel, Commissioner of the US-China Economic and Security Review Commission, wrote in an email. "The UK needs to be a strong partner in tackling China's efforts to dominate critical supply chains".

Britain's allies, such as the United States, Italy, and South Korea, all of which have stopped selling technology to China, cannot single-handedly beat China's pursuit of advanced computer chip technology. The US says only united with Britain can they fight China's acquisition of technology and can defeat the regime's predatory practices.

Nexperia, a Chinese-owned Dutch computer company, is seeking to buy a British chip company, called Newport Wafer Fab (NWF). The price offered is considered low. Because when Texas Instruments announced the purchase of the vacant Micron plant in Utah, it had to pay USD 900 million this week.

Through the purchase, the British computer technology company will give China access to all facilities. Not only to manufacturing, but also to a platform in the UK, so they get the best UK capabilities and technology for cutting-edge chip design.

Computer chip technology, held tightly as a strategic national asset in most countries, will determine China's military and economic competitiveness in the future. This is one area where the totalitarian state is still lagging.

Once China is no longer dependent on the United States and its allies to manufacture computer chips, it can pressure other countries in other ways, without fear of retaliation.

China had tried and failed to pressure tech companies in Japan in 2010, but failed. As China increases its grip on additional industrial resources, including chip technology and manufacturing, its ability to replace the UK and its allies in the global chip market, will increase.

The US also said Britain's sale of the NWF to China enabled the future totalitarian state's ability to impose draconian economic policies on the world. Therefore, the sale of NWF had to be canceled by the UK government due to national security reasons. The Chinese side has not yet provided an answer to the accusations made by the US.

Nexperia, the Netherlands-based company looking to buy the British fab, is 100 percent owned by Wingtech Technology, a Chinese company. In March, Nexperia gained an NWF board seat.

NWF, which is the UK's top 200mm silicon and semiconductor manufacturing and development facility, is invaluable given the global chip shortage and competition by the United States, Taiwan, South Korea, and China in chip production and miniaturization through protected technologies.