Ministers last night announced an investigation into the takeover of a leading British microchip maker by a firm backed by Beijing.
The Business Department has called for more information from tech firm Imagination Technologies after it was swooped on by private equity fund Canyon Bridge Capital Partners.
Officials have been under pressure to probe the £550million deal, which could be the first of many, amid concerns it would allow cutting-edge UK chip technology to be used in Chinese military and space programmes.
Ministers have been asked to look into the purchase of British computer chip firm Imagination Technologies by Canyon Bridge Capital Partners after a similar deal was blocked in the US
Earlier this month, the US government blocked a similar deal by Canyon when it tried to take over an American tech firm.
Business Secretary Greg Clark – who has the power under the 2002 Enterprise Act to refuse takeovers that damage national security – has taken the first steps to investigate the deal. The intervention came as the boss of Canyon told the Mail it has other leading British firms in its sights.
Partner Ray Bingham said his business was looking at companies in London, Oxford and Cambridge that work in the field of cutting-edge technology.
He rejected claims the American private equity firm poses a security risk to the UK or the US as ‘without foundation’. He said: ‘We have landed our first group of investors, who all happen to be Chinese, and they are prestigious international ambassadors.
‘China has an enormous amount of foreign currency reserves and so they are putting it to work. But they are limited partners… I do not see why people are uncomfortable.’
There are fears that Canyon Bridge Capital Partners, which has links to Bejing’s space programme, could use the technology to build rockets or military hardware
Ministers have so far stayed silent on the subject, despite Theresa May promising to crack down on foreign predators.
Washington vetoed Canyon Bridge’s bid for US semiconductor firm Lattice because Canyon is backed by China Venture Capital Fund, which was set up by the Chinese government and has links with Beijing’s space programme including military projects.
Critics fear that if Imagination falls under its influence it could lead to ‘back doors’ being secretly placed in the firm’s technology, allowing access to Chinese spies.
Former MI6 deputy head Nigel Inkster suggested that the bid raised questions about how the UK scrutinises takeovers. The Henry Jackson Society think-tank warned the deal posed ‘very serious concerns’.
The Department for Business, Energy and Industrial Strategy said: ‘We have statutory powers to review mergers where it is appropriate to do so. We have sought further information from the parties involved.’