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Visitors look at a semiconductor device on display at a trade fair in Shanghai in March 2021. The UK is keen to expand its presence in the chip manufacturing sector. Photo: Reuters

Boris Johnson accused of failing to probe Chinese takeover of Newport Wafer Fab, UK’s biggest chip plant

  • The PM had promised an investigation into the controversial sale to Nexperia, a subsidiary of China’s largest smartphone assembler Wingtech
  • The UK parliament’s foreign affairs select committee says, however, that it had no evidence a security review has been started

UK Prime Minister Boris Johnson has been accused of failing to carry out a promised security probe into the controversial takeover of Britain’s largest semiconductor manufacturer by China’s biggest smartphone assembler Wingtech.

Reports emerged last week that the government had quietly approved the sale of the Newport Wafer Fab plant in Wales to Wingtech’s Dutch subsidiary Nexperia. Wingtech, which is based in Zhejiang, is believed to be a third owned by the Chinese Communist Party.

UK business secretary Kwasi Kwarteng and Nexperia both later denied that the deal had been approved.

Asked whether it had investigated or planned to investigate the Newport Wafer Fab sale under new national security legislation, the UK government said it was considering the case and no decisions have been made.

However, in a statement issued on Tuesday, the UK parliament’s foreign affairs select committee (FAC) said it had no evidence a security review had even begun.

Parliament granted the government new powers three months ago to probe takeovers by companies belonging to states deemed hostile under the National Security and Investment Act.

“Semiconductors are essential to every aspect of modern life and Newport Wafer Fab is one of the country’s leading manufacturers,” said Conservative MP Tom Tugendhat, who is the chair of the FAC.

“The takeover by Nexperia left many wondering why we are seemingly handing over critical security infrastructure to overseas companies with well-documented links to the Chinese state,” he said.

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“The prime minister’s assurances that work is under way are welcome. However, so few details have been provided to the committee that we are left with the unfortunate conclusion that no review has taken place.”

Johnson promised the committee to carry out a security review into the takeover last July, soon after the deal was announced.

In its statement on Tuesday, the committee called on the government to clarify why a review was requested in the first place and why it had not been started.

“The government has the tools, it just needs to use them,” Tugendhat said.

02:27

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The Daily Telegraph reported last week that Johnson’s cabinet was bitterly divided over the affair, which has echoes of the government’s decision to block Chinese telecoms giant Huawei Technologies Co.’s involvement in the UK’s roll-out of 5G mobile networks.

In July 2020, under pressure from the US, Johnson did a U-turn on previous decisions and announced that Huawei equipment would be excluded from its next-generation mobile systems over national security concerns.

Some UK lawmakers, like Tugendhat, a China hawk, believe the Nexperia deal will see a rare UK advanced chip manufacturing plant handed over to Beijing. Newport Wafer fab employs 450 people and makes 200mm wafer silicon chips used especially in electric vehicle manufacture.

The UK’s semiconductor industry is less developed than those in some EU countries, and London is keen amid a worldwide chip shortage to expand the country’s presence in the sector, which is key for everything from mobile phones to electronic missiles.

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Wingtech’s Dutch subsidiary, based in Nijmegen near the Dutch border, appeared to confirm not only that no approval had been granted but also that no review of the deal had been initiated.

“Nexperia has not been notified of such a decision, has not heard on this matter from the UK government since it acquired the Fab, and previously informed the government [it would] be ready to cooperate with any review,” the company said in a statement.

Nexperia took a 15 per cent stake in the Welsh factory in 2019 with the option to trigger a 100 per cent buy-out and to put two directors on the Newport Wafer Fab board if it fell into financial difficulties.

Needing new investment to meet semiconductor orders placed by Wingtech, the Dutch company exercised its right to take over the whole Welsh plant last summer in a deal valued it at £63 million (US$82.6 million), which included paying off a £17 million Welsh government loan.

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