Chinese backer of UK tech takeover accused of military ties

A Chinese tech giant funding the takeover of a British semiconductor company has been accused of links to the country’s military.

Goertek, which is providing a £75m loan for the takeover of Plessey, co-operates with military research institutions and has fostered close relationships with the ruling Communist Party (CCP), according to researchers.

A report from the Australian Strategic Policy Institute (ASPI), a think tank partly funded by the Australian defence department, said that the “extent of [Goertek’s] alignment with the CCP – which goes beyond the established ‘norm’ for Chinese companies – raises significant national-security concerns”.

Last week, investment firm Haylo Labs bought Plymouth-based Plessey, which dates back to 1917 and is one of Britain’s last remaining high-tech manufacturers.

The deal is being financed by a five-year $100m (£75m) loan from Goertek, a Chinese tech giant.

Goertek is a major supplier to tech companies including Apple and Meta but has also been accused of close links to the CCP.

The ASPI report said that the company had collaborated with the Qingdao Research Institute at Beihang University, a top military research institution that has been added to US export controls lists after accusations it had attempted to acquire American rocket and drone technology.

Jiang Bin, the company’s billionaire chairman and co-founder, is also a member of China’s National Congress.Jiang Bin, Goertek’s billionaire chairman and co-founder is a member of China’s National Congress - Imaginechina Limited / Alamy Stock Photo

Plessey is a specialist in high-performance micro LEDs, an advanced screen technology that is expected to grow in the coming years amid the rise of virtual reality and augmented reality (AR) devices.

The company already supplies Meta, which is developing advanced smart glasses, having worked with the Silicon Valley giant for the last five years.

Haylo Labs – founded by former executives at Snap and WaveOptics, a British smart glasses company – promised this week to invest £100m into Plessey, expanding its workforce and opening new manufacturing sites with Goertek overseas.

Goertek will not have a stake in the business or any board influence, with the companies saying its interest extends only to financing.

The company already has deep relationships with Western companies, manufacturing on behalf of Apple, Meta and Google, and has a stake in the American display company Kopin, which supplies the US military.

However, the ASPI, which has also been financed by the US state department, said the company was also involved in several technologies with potential military applications such as drones and technology to train pilots.

‘Seriously dangerous’

The deal has been assessed and cleared under British national security laws.

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A Haylo Labs spokesman said: “We are securing Plessey’s future by investing in Plymouth, doubling the workforce and boosting high-tech manufacturing in the UK.

“This loan is no risk to British national security, it is a financial agreement with a high-volume manufacturer.”

Goertek did not respond to a request for comment.Sir Iain Duncan Smith says tech takeovers involving Chinese companies are ‘seriously dangerous’ - DANIEL LEAL/AFP

Sir Iain Duncan Smith, the former Conservative leader and co-chair of the Inter-Parliamentary Alliance on China, said allowing the sale of Plessey represented a “complete cave-in to China”.

“Any company in China is monitored under national security laws, which require them to give any data or intel to the government.

“They are not independent of the government and that makes all takeovers involving Chinese companies seriously dangerous, especially in technology.”

A series of China-linked high-tech investments in Britain have been blocked in recent years.

They include the takeover of Newport Wafer Fab by Nexperia, a Dutch company owned by China’s Wingtech, and Versarien, an advanced manufacturing group specialising in graphene.

However, recent months have seen a decline in the number of deals blocked.

In the 12 months to April, the Government investigated 18 deals involving Chinese acquirers and blocked eight. The year before that, it blocked 16 of the 17 Chinese-linked deals it scrutinised.

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