US giant swoops for British chipmaker months after Chinese sale blocked on national security grounds

·2 min read
US China microchip competition
US China microchip competition

A US semiconductor giant has snapped up a British microchip design company months after the government blocked a Chinese takeover of the business on national security grounds.

Cadence, a $55bn (£44bn) US-listed company, has taken over Bristol-headquartered Pulsic.

The US tech firm, which has revenues of $3.5bn and employs 10,000 people, creates electronic design automation, or EDA, software.

These computer programs are used to craft the billions of tiny components that go into a modern microchip.

Chip design software has become a key battleground in a trade war between the US and China. The White House has tried to choke off Beijing's access to the software for building the most advanced generation of processors.

Last October, the US Department of Commerce imposed export restrictions on some of the most advanced EDA tools, limiting the work companies such as Cadence can do with Chinese customers.

Founded in Bristol, Pulsic has supplied semiconductor design tools to customers around the world for more than two decades.

It has around 45 staff, according to LinkedIn, and revenues of £3.8m in the year ending 2022. It turned a £665,000 profit last year, according to its latest accounts.

Last summer, Kwasi Kwarteng, the former business secretary, stepped in to block a potential acquisition of Pulsic by Chinese investor Super Orange HK Holding.

Kwasi Kwarteng - Jamie Lorriman
Kwasi Kwarteng - Jamie Lorriman

Bloomberg reported that the mysterious buyer was ultimately funded by state-Chinese backed investors.

Mr Kwarteng warned the takeover could "facilitate the building of cutting-edge integrated circuits" that were potentially "dual use" and could be put to use by the Chinese military.

Terms of the takeover by Cadence have not been disclosed. A Cadence spokesman said: "Cadence has acquired Pulsic, and we expect to be sharing more information in the next couple of weeks."

News of the takeover comes after Rishi Sunak on Friday revealed Britain’s long-delayed national semiconductor strategy, worth £1bn over ten years.

The Government last week confirmed it had given the green light to establish a semiconductor research institute and a technology "incubator" to help cutting-edge chip start-ups.

However, the funding commitment was criticised by British technology companies.

Simon Thomas, chief executive of British graphene chip start-up Paragraf, said the announcement was “quite frankly flaccid”.

In the US, President Joe Biden unleashed tens of billions of dollars in support of the US semiconductor sector amid tensions with China over Taiwan, a hub of international chip making.

The White House has been courting British semiconductor companies to set up shop across the Atlantic and there are concerns within industry that the UK has struggled to scale up its domestic sector.

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