U.K. lawmaker warns about companies selling to China over growing concerns of intellectual property theft

UK lawmaker Iain Duncan Smith told the U.K. Parliament on Thursday China has ongoing plans to buy up chip companies to attain supremacy in the semiconductor industry. This is so important because chips are crucial in technological development from car sensors to making deadly weaponry. 

Chips are currently in short supply due to increasing demands and nations are ensuring as much as possible to have enough of them. 

Former leader of the conservative party, Duncan Smith believes that China is using unethical and questionable methods to get chips as it strives to become a world leader in the semiconductor industry. He told the UK parliament that China has identified this key area and is making moves to dominate it. The semiconductor industry is currently led by Taiwan, South Korea, and the United States – countries that are home to chipmaking giants, TSMC, Samsung, and Intel.

The UK Lawmaker accuses China of “stealing technology, getting other people’s intellectual property rights, and buying up companies.” He is a vocal critic of China and has dedicated his part of his resources to gather facts on China trade.

Beijing did not immediately respond to CNBC’s request for comment but has strongly denied allegations of theft of intellectual property in past times. In November 2018, for example, China’s Ministry of Commerce spokesperson Gao Feng reportedly said that all accusations that China steals IP from the U.S. are false and hearsay. The following month, the country’s Foreign Ministry strongly opposed all allegations by the U.S. and other allies that criticize the Chinese government for economic espionage.

Duncan Smith’s accusations came after Chinese-owned Nexperia announced plans to buy Newport Wafer Fab, the biggest chip manufacturer in the UK. Although Nexperia is headquartered in the Netherlands, it is owned by China-based Wingtech Technologies.

The U.K. government initially said it wouldn’t intervene in the acquisition process, but Prime Minister Boris Johnson on Wednesday said the deal will be reviewed by national security adviser Stephen Lovegrove, after giving it another thought.

“We have to judge whether the stuff that they are making is of real intellectual property value and interest to China, whether there are real security implications,” Johnson said.

Amanda Solloway, UK’s Business Minister said despite the review that is set to be carried out, the government will not intervene at this stage as there are no current national security concerns.

“It is right that commercial transactions are primarily a matter for the parties involved,” Solloway said. “The government has been in close contact with Newport Wafer Fab but it does not consider it appropriate to intervene in this case at the current time.”

Reports carry that several other European chip companies – including Britain’s Imagination Technologies, Netherland’s Ampleon, have been sold to China-backed companies.