The UK government gives itself the power to prevent foreign takeovers of domestic companies in 17 areas, including artificial intelligence, robotics, chips, transport and nuclear power.

The National Security and Investment Act (NSI), a new legal system that gives British ministers sweeping powers to prevent foreign takeovers of domestic businesses, went into effect on Tuesday (January 4).

Described by the government as “the biggest change to the UK’s national security system in 20 years”, legal rules give the government the ability to vet and monitor takeovers by anyone, including companies and investors, deemed harmful. A citizen of the United Kingdom.

British ministers already have statutory powers to intervene in deals where a foreign-led takeover could affect economic stability, media pluralism, the UK’s response to the pandemic or national security. However, the law builds on the government’s ability to propagate the national security logic of a takeover.

The UK government has rejected claims that the law protects and hinders business, saying the vast majority of takeovers require no intervention and can move forward quickly. The government has made it clear that it will not reconsider any transaction once it is completed unless false or misleading information is provided.

Under the rules set out in the new law, it was decided that 17 areas of the economy require more oversight when foreign investors want to make an acquisition. In addition to defense and military technology, ministers can study deals in a wide range of sectors, such as advanced robotics, artificial intelligence, the civilian nuclear sector, transportation and quantum technology.

“The UK is known around the world as an attractive place to invest, but we have always been clear that we will not hesitate to step in if necessary to protect our national security,” said British Foreign Secretary Kwasi Quarting.

“The new investment vetting process, effective today, is simple and fast, giving investors and companies the assurance they need to do business, and giving everyone in the UK peace of mind that their safety is our number one priority. It remains a priority.” he added.

Observers see the new law as an attempt by the Boris Johnson administration to prevent a Chinese takeover of strategically important technology companies.

UK regulators also recently prevented rival Nvidia from acquiring the $75bn (£56bn) of the world’s largest chip maker (seen as the crown jewel of the British tech sector).

In July 2021, the UK government launched an investigation into the acquisition of the UK’s largest semiconductor plant, Newport Wafer Fab, by China’s Nexperia, which is owned by Nexperia.

In its report, the Competition and Markets Authority (CMA) indicated that the combined business entity would have the ability and incentive to harm the competitiveness of Nvidia’s competitors by restricting access to ARM’s IP used by companies that make semiconductor chips and related products, in competition with Nvidia.

Newport Wafer Fab, which makes semiconductor wafers at its plant in Duffryn, Newport, employs 450 people and is the largest chip maker in the UK. Produces chips on which electronic circuits are printed

Although Nexperia is headquartered in the Netherlands, it is owned by the Chinese company Wingtech Technologies. It already has a location in Manchester.

Several MPs across party lines urged the government to use the new National Security and Investment Act to prevent the takeover of the Newport Wafer Fab.

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