Chinese owner ordered to decrease ownership in Newport Wafer Fab semiconductor factory, “placing at jeopardy the livelihoods of [workers] and their families, as well as more than £100 million of taxpayers’ money”
Due to security concerns, a Chinese-owned technology business has been instructed to divest the majority of its stake in a British silicon chip manufacturer.
To “mitigate the threat to national security,” the government has mandated that Nexperia reduce its stake in Newport Wafer Fab by 86%, bringing it back to the 14% it held when it acquired the company in 2021.
Nexperia responded with shock and anger to the announcement, stating that it does not accept the state’s reasoning and that 500 jobs are now in jeopardy.
The comprehensive solutions that Nexperia proposed to address the government’s concerns have been completely disregarded,” the company said in a statement.
“The British government chose not to engage Nexperia in a meaningful dialogue or even visit the Newport site.
“More than 500 employees in Newport voiced their significant concerns about such a divestment; however, the government chose not to listen to them and instead made a decision that jeopardizes their livelihoods and those of their families, along with more than £100 million of taxpayers’ money.”
The company announced that it will contest the order to retain the factory and jobs.
The government investigated the acquisition of the Newport Wafer Fab factory due to national security concerns.
The factory has been a crucial location for decades, producing tiny silicon chips. There is currently a global shortage of semiconductors used in automobiles and common electronics.
The investigation was conducted under the new National Security and Investment Act, which grants the government the authority to intervene retroactively in a transaction. Nexperia had already acquired Newport Wafer Fab for an estimated £63 million.
Security concerns were voiced by both the industry and members of Congress.
The Department of Business, Energy, and Industrial Strategy expressed security concerns in a statement released on Wednesday, stating that the potential development of compound semiconductors at the Newport site could “undermine UK capabilities.
Former National Cyber Security Centre chief executive Ciaran Martin characterized the acquisition as a greater threat to British interests than Huawei’s participation in the 5G network.
Tom Tugendhat, the previous chairman of the Foreign Affairs Committee of the House of Commons, had raised worry that corporations, notably in China, had a history of leveraging foreign investments to obtain access to vital technologies and information.
The announcement of the investigation’s findings has been repeatedly postponed. The original deadline for a decision was set for June, but the BEIS requested an extension of 45 days.
As the Tory leadership contest dragged on into the summer and the administration played political musical chairs with the departures of former chancellor Kwasi Kwarteng and then former prime minister Liz Truss, further delays plagued the project.
The extended September and October deadlines have gone.
What occurs next is uncertain. According to the Financial Times, former owner Nelson intends to repurchase the company. According to the conditions of Nexperia’s acquisition, Nelson gets the first chance to repurchase the company.
Nexperia has maintained that it and its parent firm, Wingtech, are independent of the Chinese government.
