Ministers are understood to have called for Business Secretary Kwasi Kwarteng to intervene and block the sale amid a Cabinet split over the issue.
Newport Wafer Fab, the UK’s largest semiconductor factory, was sold last year to Nexperia, a Dutch company owned by China’s Wingtech.
The £63million deal caused a huge uproar from MPs over growing concerns of Beijing’s acquisitions of Western innovative firms, leading to the Government’s national security adviser, Sir Stephen Lovegrove, launching an investigation into the case.
An initial review by the deputy national security adviser found last year that there was no case for intervention as the Welsh firm used technology already available in China.
But Sir Stephen was asked to conduct a further assessment of whether the sale should be blocked under the National Security and Investment Act, which is a post-Brexit act that gives ministers the power to intervene in foreign takeovers to protect national security.
He has since revealed he believes there is no risk to the country’s security and recommended against blocking the deal.
It comes after Mr Johnson promised to “back” British businesses and said the decision to leave the EU would make it “faster and easier” for ministers to intervene and protect jobs in struggling UK-based firms.
The decision has caused a backlash online from MPs and members of the public.
Express.co.uk reader Al90 said: “We just don’t learn, we keep selling our businesses to foreign nations. Why are we so afraid to back British companies?”
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Professor Alan Sked, of the London School of Economics, tweeted: “Kwarteng is under pressure to block a Chinese takeover of Britain’s largest microchip factory. For pity’s sake can he even hesitate? Is this a Tory Government?”
Readers expressed their frustrations with the government selling British firms to other countries, with one reader, Voice_of_sanity, writing: “Why are people surprised? The Tories sell anything that isn’t nailed down! And if it is nailed down they try and sell the nails too!”
Another reader said: “If it happens the plant will be stripped bare and all the gear will end up in China. Well done Boris, not.”
Similarly, Maine Yankee wrote: “China should be barred from buying any business in the west let alone something vital to security.”