By Li Panpan

A British politician is questioning the Chinese takeover in August 2022 of the University of Cambridge’s spin-off company Flusso, saying the acquisition was not examined under the terms of the British National Security and Investment Act (NSIA), reported the Register recently.

Alicia Kearns MP, a Conservative representative for Rutland and Melton and Chair of the Foreign Affairs Committee, has written to UK's Business Secretary Grant Shapps regarding the purchase of Flusso Ltd, a Cambridge-based fabless semiconductor biz at £28 million ($34 million), which turns out to have been taken over by a Chinese organization with links to the state.

Flusso develops digital flow sensor technology. It was acquired last August by "a company and a global private equity fund," the identities of which were not disclosed at the time of the takeover, said the Register report.

However, official documents filed with Companies House, which maintains the official register of UK corporations, show that ownership of all shares in Flusso was transferred on August 11 to a special-purpose vehicle known as Shanghai Sierchi Enterprise Management Partnership.

A South China Morning Post report said that Shanghai Sierchi Enterprise Management Partnership was officially incorporated in Shanghai at the end of 2021 and is 80% owned by Zhenxin Equity Investment Partnership based in southeastern China's Fujian Province.

Furthermore, it turns out that Zhenxin Equity is a subsidiary of Baoding Investment, a company founded in 2000 that has both private ownership and is partly owned by the Chinese state, according to SCMP.

Kearns has written to Shapps, the Secretary of State in charge of the Department for Business, Energy and Industrial Strategy (BEIS), to raise concerns that the acquisition was not examined under the terms of the National Security and Investment Act (NSIA), according to Register.

This Act of Parliament, which came into force on January 4, 2022, gives the UK government the power to scrutinize business transactions and potentially intervene on the grounds of risks to national security.

The Act was controversially used on November 16, 2022, to order that the takeover of semiconductor maker Newport Wafer Fab by Nexperia, now a subsidiary of Chinese Wingtech Technology, should effectively be reversed. This decision is now being challenged in court by Nexperia.

BEIS blocked three transactions due to the Act since it came into force in less than one year, and all the acquirers were Chinese-funded enterprises, said the Register.