US warns UK over Huawei plan to spend £1bn on chip facility

The US issued a fresh warning about security risks posed by Huawei after the Chinese company was given clearance to build a £1bn new chip research and manufacturing facility in England, saying the decision put its trust in the UK at risk.

US officials directly lobbied against the plant with British politicians, but a committee of South Cambridgeshire district councillors on Thursday voted nine to one in favour of Huawei’s project which has thrust the tiny village of Sawston into the global spotlight.

“We believe countries need to be able to trust that partners will not threaten national security, privacy, intellectual property, or human rights,” the US state department said in a statement to the Financial Times.

“Trust cannot exist where a company such as Huawei is subject to an authoritarian government, like the PRC [People’s Republic of China], that lacks an independent judiciary or rule of law that would effectively prohibit the misuse of data,” said the department, adding that it urged all countries, “particularly allies and partners like the United Kingdom, to carefully assess the long-term impact of allowing untrusted companies like Huawei access to sensitive information”.

Huawei has said it will spend £1bn over the next five years to establish the new facility near Cambridge, in the east of England.

The Chinese equipment company’s investment in the Cambridgeshire countryside is much higher than initially forecast and comes in the middle of a fierce political debate over the use of its equipment in Britain’s telecoms networks.

Tom Tugendhat, Conservative chairman of the Commons foreign affairs committee, said he had been contacted directly by senior US administration officials who were concerned about the new facility.

“They are concerned about the possibility that US chips will be tested by Huawei in the UK,” said Mr Tugendhat. Usually the British government would welcome such a large foreign inward investment but the Department for Digital, Culture, Media and Sport declined to comment.

The UK’s National Cyber Security Centre, a branch of GCHQ, last month launched an emergency review into the use of Huawei equipment — just days after Washington placed new export controls on the company aimed at choking off its access to the supply of semiconductors designed and manufactured using US equipment.

The new site in Cambridgeshire would be used to develop and manufacture semiconductor technology aimed at speeding up data transmission over fibre broadband networks, however. Known as optoelectronics, it is distinct from the equipment targeted by US sanctions, according to Huawei.

But the US state department said Washington was “deeply concerned” about the serious risk posed to both US and UK national security by what it described as China’s strategy to acquire technology and intellectual property through collaboration, investment, joint research, deception and “outright theft”.

The company’s vice-president, Victor Zhang, told the FT that the new investment would support the UK government’s plan to grow the country’s research and development spend as a proportion of gross domestic product. He added that the facility would create about 400 skilled new roles, helping the government’s aim to grow high-tech employment. Mr Zhang added that building the new site would also boost jobs in the local construction industry. “This will help deliver the UK’s industrial strategy,” he said.

Mr Zhang said the company was committed to the new centre, which would be its international headquarters for optoelectronics, no matter what the outcome of the new NCSC review.

“This centre is not to support BT or Vodafone’s network . . . I don’t think there is a strong link.”

Huawei acquired the land in Sawston, a village close to the river Cam seven miles from Cambridge, in 2018, after a two-year hunt for a brownfield development in the area. The 550-acre site used to belong to Spicers, a stationery business, and was acquired for £37.5m. The brownfield element of the site has been used to store sugar beet.

The £1bn would be spent on construction costs and salaries for workers during “phase one” of the establishment of the facility, said Huawei. It would be on top of previous commitments by the company to spend billions with UK businesses including WPP, KPMG and Arm, the chip designer located a 15-minute drive away.

Huawei has developed optoelectronics technology used in global broadband networks in Adastral Park in Ipswich since it bought a small unit of BT in 2012.