UK Orders Chinese Entity To Sell Stake In Scottish Chip Firm FTDI

A Scottish chip firm is at the centre of national security concerns, after the UK government made a high profile intervention over its ownership by a Chinese entity.

The British government on Wednesday 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.

“Following a detailed national security assessment, the Chancellor of the Duchy of Lancaster has made a Final Order pursuant to section 26 of the National Security and Investment Act 2021 (“the Act”), which comes into force on 5 November 2024,” the government stated.

Final order

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.

The government said that acquisition was a trigger event under section 8(2)(c) of the National Security and Investment Act.

Three years later and the Chancellor of the Duchy of Lancaster has now imposed a final order, which effectively requires FTDIHL to sell 80.2 percent of FTDI within a specified period and by following a specified process.

The Chancellor of the Duchy of Lancaster “considers that this measure mitigates risks to national security” in relation to:

• UK-developed semiconductor technology and associated intellectual property being deployed in ways that are contrary to UK national security.
• The ownership of FTDI being used to pose a risk to critical national infrastructure which uses FTDI products.

The government said that the Chancellor of the Duchy of Lancaster “considers that the Final Order is necessary and proportionate to mitigate the risk to national security.”

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 United Kingdom 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.