(Yicai) Feb. 9 -- A Chinese-led acquisition of UK chipmaker Future Technology Devices International has been pushed into a forced sale after the British government’s national security deadline took effect.

The order stems from a decision made under the UK’s National Security and Investment Act, which took effect in 2022. In November 2024, the British government informed the Chinese consortium that it must transfer all of its equity in FTDI within a prescribed period, citing potential threats to national security. The deadline passed last weekend.

FTDI Acquisition and Ownership Structure

Founded in March 1992 and registered in Glasgow, FTDI is a major global designer of universal serial bus bridge chips, with products used in industrial control, communications equipment, automotive electronics, and consumer electronics. The company holds close to 20 percent of the global market share in the USB bridge chip segment.

In early 2021, the Chinese consortium completed the acquisition of about 80.2 percent of FTDI through FTDI Holding, a wholly owned UK subsidiary established via Feite Holdings in Dongguan. The deal was valued at about USD414 million, including roughly USD364 million in domestic self-owned funds and USD50 million in loans from an overseas bank. The remaining 19.8 percent stake is held by the founding company, Stoneyford Investments.

Feite Holding is jointly owned by five funds under Beijing Jianguang Asset Management. Through these funds, listed firms such as Electric Connector Technology and Hua Pengfei indirectly hold interests in FTDI.

“The deal was completed many years ago. Forced divestment will affect the company’s operations and customer confidence,” a source close to the transaction told Yicai. “The Chinese consortium made multiple attempts to communicate with the British side and submitted alternative proposals, including applications for extensions and commitments aimed at continued ownership under compliance conditions, but none were accepted.”

The consortium is still seeking more time, with its latest application for an extension awaiting a response from the UK side. Based on past experience, approval remains possible, the source said.

The acquisition was conducted through a public bidding process that attracted nearly 10 bidders, including overseas industrial players and Chinese listed companies, with the Chinese consortium ultimately prevailing. After the deal closed, FTDI Holding appointed directors to FTDI, and from 2022 to 2023, the company reported rising profits, with cumulative net profit exceeding USD100 million.

Legal Ruling and Broader Impact

Despite the deal’s commercial performance, regulatory scrutiny intensified in the years following the acquisition.

The UK government initiated a national security review of the FTDI transaction in November 2023 and ruled a year later that it posed a security risk, ordering the Chinese consortium to divest its entire stake. In February 2025, the High Court of England and Wales rejected an interim relief application filed by the consortium and upheld the compulsory sale order.

The ruling has not only affected this transaction but has also prompted broader changes in how Chinese companies approach overseas mergers and acquisitions. “Chinese enterprises have to reassess the uncontrollable risks in overseas acquisitions arising from the current unstable geopolitical environment,” the source added.

Editor: Emmi Laine