UK forces Chinese-owned company to offload Newport Wafer Fab

Owner 'shocked' to find itself in Dutch over national security concerns, promises to appeal

The UK's secretary of state for Business, Energy and Industrial Strategy has ordered that the Chinese owner of the Newport Wafer Fab sell off its interest in the facility on grounds of national security.

Secretary Grant Shapps on Wednesday published an order [PDF] in which he explained ownership of the facility represents a national security risk as:

i. technology and know-how that could result from a potential reintroduction of compound semiconductor activities at the Newport site, and the potential for those activities to undermine UK capabilities; and ii. the location of the site could facilitate access to technological expertise and know-how in the South Wales Cluster (“the Cluster”), and the links between the site and the Cluster may prevent the Cluster being engaged in future projects relevant to national security.

The Newport Wafer Fab is the UK's largest chipmaking facility. In July 2021 it was sold for £63 million ($111,500,000) to Dutch company Nexperia, which itself became a subsidiary of Chinese outfit Wingtech Technology in 2018.

News of the sale to Nexperia saw then-prime minister Boris Johnson promise to a conduct a national security investigation into the takeover. That probe led to a damning report titled "Sovereignty for sale: follow-up to the acquisition of Newport Wafer Fab" and allegations that the probe ordered by Johnson had amounted to nothing. A full assessment under the National Security and Investment Act was then instigated, with the result that Shapps has now ordered Nexperia to sell at least 86 percent of the Newport facility.

Nexperia has published a statement condemning the decision.

"Nexperia, headquartered in The Netherlands, is shocked by the UK Government's decision to order the divestment of 86% of its semiconductor wafer factory in South Wales … despite the acquisition being cleared by two previous security reviews," the statement opens, before stating the company "does not accept the national security concerns raised."

"The far-reaching remedies which Nexperia offered to fully address the Government's concerns have been entirely ignored," the statement adds.

"The UK Government chose not to enter into a meaningful dialogue with Nexperia or even visit the Newport site," the document continues. "More than 500 employees in Newport also raised their own significant concerns about such a divestment – the Government has chosen not to listen to them and instead taken this decision which puts the livelihoods of them and their families, as well as more than £100m of taxpayers' money, completely unnecessarily at risk."

"Nexperia will now challenge the order and will do everything possible to keep the factory and protect its employees in South Wales."

The statement asserts that Nexperia "proposed far-reaching remedies to BEIS's Investment Security Unit that fully address even these potential concerns." Among those remedies was a pledge "not to conduct the compound semiconductor activities of potential concern and to provide the UK Government with direct control and participation in the management of Newport."

Nexperia says "no dialogue" took place between the Government and Nexperia on these proposals and that none of the three responsible secretaries of state who had power to decide the matter responded to Nexperia's requests for dialogue.

"We rescued an investment-starved company from collapse," said Nexperia's UK Country Manager, Toni Versluijs. "We have repaid taxpayer loans, secured jobs, wages, bonuses and pensions, and agreed to spend more than £80 million on equipment upgrades since early 2021. Those who sold the business to us agreed that it was the only viable solution."

Versluijs vowed to appeal the decision.

The decision was made after the conclusion of a G20 summit at which a hoped-for meeting between UK prime minister Rishi Sunak and Chinese president Xi Jinping was cancelled after "scheduling issues". Sunak was called into impromptu meetings with European colleagues to discuss an explosion of ordnance in Poland, so the scheduling explanation is plausible.

The UK recently ordered local telcos to remove Huawei kit from their 5G networks, and blocked the sale of chip design firm Pulsic Limited to Chinese buyers – indicators of London's keenness to keep local tech out of Beijing's hands. ®