Undermining a priority American foreign policy objective, the United Kingdom has authorized the sale to China of its largest semiconductor chip manufacturer, Newport Wafer Fab.
British Prime Minister Boris Johnson appears to have abandoned his commitment to protect this supply chain area more actively. As Tom Tugendhat, an influential Conservative parliamentarian, observed to CNBC, it was only last month that Johnson “pledged to take steps to build economic resilience in critical global supply chains, such as semiconductors. This appears to be an immediate and very public reversal of that commitment.”
That’s putting it politely.
But there’s nothing polite about how Beijing intends to use wins like this one. They’re designed to advance China’s global economic and military hegemony — a hegemony Beijing would then use to extract political obedience and economic feudalism. Considering what Communist China does to its own people, the United States has good reason for wanting the help of Johnson and other allied leaders. Washington needs that allied action to ensure that democracies rather than Beijing set the rules of the 21st-century game.
The semiconductor issue is particularly important. These chips are key building blocks for computers, cellphones, networks, and processors. They are critical for both economic and national security reasons. Amid a global semiconductor foundry shortage, companies like Newport Wafer Fab are highly valuable.
While the Dutch firm Nexperia will purchase Newport Wafer Fab, that’s only the tip of the iceberg because Nexperia is owned by Wingtech, a Chinese firm. And Wingtech’s owner is Zhang Xuezheng, an entrepreneur with close, long-standing links to the Chinese Communist Party. This purchase should thus not be seen purely, or even primarily, through a business interest lens. Instead, it’s a means of direct and substantive support to China’s pursuit of global dominance.
Xi Jinping hasn’t simply got new access to some exceptionally precious intellectual property. He has done so in a way that very publicly undermines U.S. efforts to countermand him. The Biden administration has made the case to its allies that this struggle with China is about more than economics and security — that, at its heart, the struggle with China is about values, about the influence of free peoples and democracies in the face of rapacious authoritarianism. But where America’s closest ally stands apart from Washington, what message does that send to other U.S. allies? What message is sent to France and Germany, for example, whose leaders were again praising Xi in yet another video summit on Monday?
What message, also, is it for leading innovators in the Western world?
Until recently, Newport Wafer Fab’s largest shareholder, Drew Nelson, supported patriotic entrepreneurship of the kind that Zhang evidently offers China. One year ago, Nelson was telling the Telegraph that the U.K. needed a “sovereign” semiconductor chip industry to compete with China. The $15 million Nelson will get as part of this deal has apparently led him to change his tune. The businessman’s greatest namesake would shudder at his hypocrisy. Were it so capable, Newport Wafer Fab’s website might also shudder. This sale, after all, is rather incompatible with the company’s commitment “to acting ethically and with integrity in all of its business dealings.” Much like the American multinationals that deal in China, the rhetoric isn’t worth very much.
Yet the real lament here should fall on Johnson. For all his special relationship wordplay, it seems that the leader of America’s closest ally isn’t all that interested in that relationship.
Still, at least America has Australia.
