The UK High Court has upheld the government's decision requiring Chinese state-backed FTDI Holding Limited (FTDIHL) to sell its 80.2% stake in British semiconductor firm Future Technology Devices International (FTDI). FTDIHL, which acquired the majority share in FTDI in December 2021, had appealed the decision, citing concerns over potential risks to national security due to Chinese ownership of the company. However, the court rejected the request for interim relief, affirming that national security considerations outweighed the investment firm's claims.

FTDI, founded in 1992 and based in Glasgow, is a well-known player in the semiconductor industry, particularly recognized for its USB-to-serial bridge chips used in various applications, including automotive electronics, medical devices, and industrial robotics. FTDIHL's acquisition raised alarms about the possible transfer of sensitive UK-developed semiconductor technology to China and its potential impact on critical national infrastructure.

In response to the court's ruling, FTDIHL expressed its disappointment, arguing that it had never posed a national security threat. The firm had sought an injunction to pause the divestment process until the judicial review of the decision was completed. However, the court dismissed this request, stating that delaying the divestment would only prolong the risks associated with the Chinese ownership.

Pat McFadden, the Chancellor of the Duchy of Lancaster, emphasized that the decision was made under the National Security and Investment Act 2021, which grants the government authority to intervene in business transactions if they pose a risk to national security. McFadden specifically cited concerns over the potential transfer of semiconductor intellectual property to China and the associated risks to the UK's infrastructure.

FTDIHL's legal team argued that it had proposed interim measures to mitigate any risks and believed that divestment was unnecessary. However, the court determined that the potential national security risks were significant enough to require the immediate sale of FTDIHL's stake in FTDI.

This ruling comes amid growing scrutiny of Chinese investments in the UK's semiconductor sector. It mirrors a similar decision made in 2022 when the UK government forced Chinese-owned Ansem Semiconductor to sell its stake in the Newport Wafer Fab, a UK-based semiconductor facility, under the same national security framework.

While FTDIHL plans to continue its legal fight, the court's ruling has set a precedent in the UK's ongoing efforts to safeguard its semiconductor industry from foreign influence, particularly from state-controlled entities. The case highlights the increasing tension between economic interests and national security concerns in the global tech industry, especially as the UK navigates its complex relationship with China.