UK Government Blocks Sale of Pulsic to Chinese Investors On Grounds of National Security

As the western world continues to tighten its grip on semiconductor technologies, the UK government has blocked a sale of a British semiconductor technology company to oversea investors in Hong Kong. Who are Pulsic, why was the sale prevented, and does this demonstrate China’s continuing devotion to obtaining semiconductor technologies?

Who is Pulsic, and what do they do?

Pulsic is a UK-based company that focuses on the design of Electronic Design Automation (EDA) tools for the semiconductor industry. Such tools allow engineers to create advanced semiconductor designs integrating schematic capture, part placement, die development, and simulation, and Pulsic software can be used for both analogue and digital designs. Additionally, Pulsic is designed for use with advanced nodes where complex designs are typically expected.

One notable feature of Pulsic software is their Animate Preview which provides designers with an automated placement preview of their schematic. Therefore, engineers can quickly see how their schematic will look once it has been turned into a die. At the same time, Animate Preview can recognise common features such as mirrored transistors, current sources, and cells, allowing it to create accurate die previews entirely from schematics.

UK government blocks sale of Pulsic to Hong Kong investors

Recently, the UK government announced that it has blocked the sale of Pulsic to Super Orange HK, a Chinese software developer, due to national security concerns. A new law passed by the UK government in January (the National Security Investment Act) allows the government to intervene in business acquisitions from outside foreign nations if it feels that national security is threatened. 

In the case of Pulsic, it is specifically targeted at advanced semiconductors with plenty of applications for the military. When considering that Hong Kong is no longer isolated from China, Super Orange HK having access to key technologies and solutions from Pulsic, would be required to hand over any and all data asked for by the Chinese communist party. Considering that the western world is going out of its way to prevent Chinese semiconductor development, giving China access to Pulsic software would present numerous challenges.

According to the Chinese embassy in the UK, the blockade does not present a fair and non-discriminatory environment (ironic coming from a country that actively shouts down capitalism and has been caught purging minorities in its nation-state). The embassy also commented how abusing the national security review law only damages the UK’s investment environment and long-term interests (again, this is ironic when China actively prevents foreign investment from trading stocks on the Chinese stock market). 

Does this demonstrate China’s devotion to obtaining semiconductor supremacy?

Before looking at what China is doing in general, we first need to draw attention to the use of the term “China”. Even though China itself has numerous businesses and investors, the country acts as a singular entity with the Chinese government at the centre. Most large companies in China have government-loyal elements, whether it is direct surveillance, employees, or outright ownership, and this means that data accessed by a Chinese organisation will undoubtedly be visible to the Chinese government and, by extension, the Chinese military.

As such, the actions of a single Chinese company can be viewed as being actions by the Chinese government. In fact, it is highly likely that Chinese entities are being used to try and gather key intel in semiconductor manufacturing to help aid the semiconductor industry in China.

When looking at Chinese actions over the past few years, it is evident that they are doing everything in their power to advance their semiconductor capabilities. For example, the US has moved heaven and earth to prevent ASML from selling production systems to SMIC, Chinese investors attempted to purchase the UK’s largest semiconductor foundry, and have recently obtained a used ASML system that likely helped SMIC produce 7nm devices.

Like any superpower, China recognises the power of semiconductors and how a country that fails to obtain the latest technologies will fall behind. Advanced semiconductors allow for the development of powerful AI systems, enabling the Chinese government to better control its population and thus secure power for Xi Jinping in the long run. In fact, China may see semiconductors as the key to the survival of its government in an age where information can be accessed anytime and anywhere.

Ironic, isn’t it? A country so afraid of information powered by modern technology will do anything in its power to obtain it first.