Semiconductor fab and civil nukes new focus of UK-China tensions

The Financial Times report, citing people familiar with the plans, said the government is exploring how CGN may be excluded from all future power projects in the UK.

A change in policy could have severe ramifications for the Sizewell C project in Suffolk, which France’s state-owned power company EDF is scheduled to build with backing from CGN. CGN is also involved with proposals for a successor to the decommissioned Bradwell nuclear power station in Essex.

The UK government has taken a firmer stance against Chinese companies’ involvement with British infrastructure projects and strategically important industries. Last year, the government performed a U-turn by announcing that Shenzhen-based Huawei would be completely excluded from British 5G networks by the end of 2027, having previously permitted the company a peripheral role in the 5G rollout.

The department for business, energy and industrial strategy has not commented directly on the Financial Times report. A spokesperson stated: “Nuclear power has an important role to play in the UK’s low-carbon energy future, as we work towards our world-leading target to eliminate our contribution to climate change by 2050. All nuclear projects in the UK are conducted under robust and independent regulation to meet the UK’s rigorous legal, regulatory and national security requirements, ensuring our interests are protected.”

Meanwhile, a spokesperson for China’s foreign ministry commented: “The British should earnestly provide an open, fair and non-discriminatory business environment for Chinese companies […] it is in the interests of both sides to conduct practical cooperation in the spirit of mutual benefit and a win-win result.”

Meanwhile, Ciaran Martin, former CEO of the National Cyber Security Centre (NCSC), has publicly opined that the sale of a Welsh semiconductor manufacturer – the UK’s largest facility of its type – poses a greater threat to Britain’s interests than Huawei’s involvement in the next-generation wireless telecommunications network. Martin was at the head of the NCSC when it recommended to the government that Huawei equipment could not be guaranteed to be secure.

Speaking to the Telegraph, Martin said: “Huawei in the periphery of 5G only really mattered because the Trump administration became obsessed with it for reasons they never convincingly set out. By contrast, the future of semiconductor supply is a first-order strategic issue. It goes to the heart of how we should be dealing with China.”

Industries worldwide are already suffering from a global chip shortage, caused by factors including the coronavirus pandemic obliging facilities to close temporarily or scale down production; the sudden demand for chips for gadgets to support remote work and study, and the ongoing trade war between the US and China. Under these circumstances – and with technologies such as AI classed as strategically important – resilient electronics supply chains have become a national security issue.

Earlier this month, Nexperia, a Dutch chip firm wholly owned by Shanghai-based Wingtech, confirmed plans to acquire Newport Wafer Fab for £63m. News of the acquisition attracted criticism from the House of Commons Foreign Affairs Committee, with chair Tom Tugendhat commenting: “Our fiercest competitors, notably China, have a track record of using foreign investments to gain access to important technologies and information. We’ve witnessed too many of our country’s brilliant tech firms disappear abroad with potentially significant economic and foreign policy implications.”

The Prime Minister has since requested an investigation into the purchase of Newport Wafer Fab.