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A 300 millimetre silicon wafer, with 22-nanometre chips, in the semiconductor production clean rooms at the Globalfoundries fabrication (fab) plant in Dresden, Germany, on February 11. Photo: Bloomberg
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UK probes Chinese takeover of Newport Wafer Fab, the country’s biggest chip plant

  • UK Prime Minister Boris Johnson said he asked the country’s national security adviser to look into Nexperia’s acquisition of Newport Wafer Fab
  • Dutch chip maker Nexperia was acquired by China’s Wingtech Technology in 2018
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Bloomberg
Bloomberg
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Britain’s national security adviser will examine the takeover of the country’s biggest semiconductor plant by a Chinese-owned company after lawmakers said it could threaten the country’s hi-tech future.

Nexperia NV acquired Welsh-based Newport Wafer Fab, which makes semiconductors mainly for the car industry, on Monday.

“We are looking into it. I have asked the national security adviser to review,” Prime Minister Boris Johnson told Parliament on Tuesday.

The UK’s Enterprise Act gives the government 30 days to either allow the deal to proceed or call it in for scrutiny. Nexperia’s parent company Wingtech Technology Co said in a statement earlier that the deal faces “uncertainties”.

Chinese-owned Nexperia said to buy UK chip maker for US$87 million

Beside supplying automotive plants, Newport Wafer has been focusing on more advanced compound semiconductors that are at the heart of technologies such as 5G and facial recognition. The company also has strong ties to a number of UK universities.

Johnson told parliament that National Security Adviser Stephen Lovegrove will “judge whether the stuff that they are making is of real intellectual property value and interest to China, whether there are real security implications”.

“The government needs to call this in and block it,” said former Conservative Party leader Iain Duncan Smith in an interview. “This yet again shows that despite the legislation, despite all the earlier tough talk, the government is looking two ways on China. This sale is an investment disaster.”

Vetoing the deal could antagonise Beijing and signal a hardening of Britain’s stance on Chinese investments in the chip industry, which is at the centre of a trade war between the US and China.

While Johnson has blocked China’s Huawei Technologies Co from taking part in Britain’s 5G wireless roll-out, the government has tended to take a lighter-touch approach with chip industry deals.

Obscure Chinese venture capital fund in spotlight after string of chip deals

Officials have waved through the sale of most of the UK’s major semiconductor firms including Arm Ltd, acquired by Japan’s SoftBank Group Corp in 2016, and Imagination Technologies, which went to a Chinese-backed private equity firm in 2017.

A new law was passed this year giving sweeping powers for the government to intervene if takeovers are deemed a threat to national security. Ministers will have five years to scrutinise transactions and have powers to unpick them if they are judged a threat.

“Long-term resilience”

Although Newport Wafer is one of the UK’s largest fabrication plants – where semiconductors are made – it remains tiny compared to facilities in the US and Asia, with annual revenue of 49.4 million pounds (US$68.2 million), according to the latest UK accounts.

Nexperia has been a customer of Newport Wafer for several years, a spokesman for Netherlands-based Nexperia said in an emailed reply to questions from Bloomberg.

“Newport has a proven track record and has unparalleled experience with advanced power and semiconductor technologies,” said the spokesman. “With the acquisition, Nexperia is guaranteeing its own supply chain.”

Nexperia was spun out of NXP Semiconductors NV in 2017 and acquired by a Chinese consortium led by Beijing Jianguang Asset Management Co In 2018, Wingtech – which produces mobile phones and tablets – bought a controlling stake in Nexperia for US$3.6 billion.

“I think this should be called in under the legislation,” former cabinet minister and Tory MP Damian Green said in an interview, referring to the Newport Wafer sale. “It’s clear this type of manufacturing facility lies at the heart of many industries of the future and it will be very important to our long-term resilience as a hi-tech country.”

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