The takeover of one of Wales’ leading tech firms and the UK’s biggest microchip manufacturer, Newport Wafer Fab, by a Chinese-owned company has been called in for a “full national security assessment” by the UK Government.
The move follows growing pressure from MPs amid concerns that semiconduter foundry, which employs 500 in Newport, has been acquired by a “strategic competitor”.
Boris Johnson said in July 2021 that he had asked National Security Adviser Sir Stephen Lovegrove to look at the £63m acquisition of the plant by Amsterdam-based Nexperia, which is owned by Chinese firm and Shanghai stock market listed tech firm Wingtech - a company said to be linked to the Chinese Communist Party.
However in a report last month, the Commons Foreign Affairs Committee said there was no sign that any investigation had begun.
It questioned why the UK Government had not used its powers under its recently introduced National Security and Investment Act to step in.
However, in a statement, the Department for Business, Energy and Industrial Strategy said Business Secretary Kwasi Kwarteng has finally called in the takeover.
He said: “I have called-in the acquisition of Newport Wafer Fab by Nexperia, a subsidiary of a Chinese company. There will now be a full assessment under the new National Security and Investment Act.
"We welcome overseas investment, but it must not threaten Britain’s national security.”
Chair of the Commons Foreign Affairs Committee and Tory MP Tom Tugendhat, welcomed the move. The committee has consistently called on the UK Government to overturn the acquisition on national security grounds.
Following the review decision Mr Tugendhat said:”I am glad that the campaign by the Commons Foreign Affairs Committee and the China Research Group has seen this called. We need to maintain a base to build on to ensure the UK is resilient. This isn’t just about security today but independence tomorrow. Good decision Kwasi Kwarteng, thank you.”
The UK Government has an initial period of 30 working days – potentially extendable by up to 45 days – to carry out the assessment.
Under the recently introduced legislation the UK Government had until June 4th to decide whether to call in it.
If the assessment concludes the acquisition was not in the national interest, Nexperia could be forced to divest its ownership at the price it acquired the business for. The microchip plant was recently rebranded as Nexperia Newport.
A spokeman for Nexperia said: "We have been informed of the Secretary of State’s decision. We welcome this opportunity to engage and contribute to an informed debate about our U.K. activities and investment plans. "
Nexperia, which previously had a 15% minority stake in the business, in a deal which gave it a right to acquire the entire business in the event of customer supply issues. This is did last year, which saw it taking over from indigenous firm Neptune Six which has acquired the plant in a management buyout buy-in deal in 2018 from German tech giant Infineon.
The one party communist state of China aims by 2025 to be a global leader in ten core industries including semiconductors - where it has it a goal to meet 70% of its demand through domestic supply.
Wingtech is currently building a $2bn chip fab in Shanghai with five times the capacity provided currently by NWF. The fab, which is scheduled to open later this year, will operate at 300mm as opposed to 200mm wafers (NWF).
The national interest issue test applies not just on a UK level, but more poignantly the Cardiff Capital Region, with the need for an open access chip maker at the heart of efforts to create a new hi-tech compound semiconducter cluster for the region employing thousands.
The growing network of regional industry partners including tech firms such as IQE, SPTS Technologies, Microchip and yes Newport Wafer Fab, pre the Nexperia deal. Its early stage research capacity is being backed with partners in Swansea and Cardiff universities. It is also being supported by the Welsh Government the Cardiff Capital Region’s £1.2bn City Deal.
The cluster’s industrial chain goes from wafer manufacturing right through to packaged chips, providing a capability in next generation semiconductors which are going to be at the heart of virtually every industrial vertical imaginable, including aerospace, automotive, electric vehicles communications, fibre optics, data centres 5G, healthcare medtech and robotics.
A core theme from the semiconductor community within the UK has been the need for open access compound semiconductor fabs - providing sovereign chip capability.
Nexperia have been asked to comment.
