UK’s Largest Chip Fab, Newport Wafer Fab, Acquired By Chinese Firm

The UK’s largest largest chip producer, Newport Wafer Fab, has been acquired by a Dutch firm that is in turn owned by a Chinese entity.

Newport Wafer Fab is based in Newport, Wales, and it is a high volume 200mm wafer fab that makes silicon chip used in power supply applications for the car industry, which has been hit particularly hard by the chip shortage. The  fab has also been developing more advanced “compound semiconductors,” which are faster and more energy efficient.

Newport Wafer Fab was acquired by Dutch chip firm Nexperia, its Chinese owners Wingtech announced on Monday.

Newport Wafer Fab

“With the acquisition, Nexperia obtains 100 percent ownership of the Welsh semiconductor production facility,” said Wingtech. “Nexperia Newport will continue to have a strong position in the Welsh ecosystem and technology development and will secure the current jobs at the Newport site and others across the region.”

The Newport site complements Nexperia’s other European manufacturing operations in Manchester and Hamburg, which have also seen recent investments.

“We are very excited to include Newport as part of our global manufacturing footprint,” said Achim Kempe, Nexperia’s Chief Operations Officer. “Nexperia has ambitious growth plans and adding Newport supports the growing global demand for semiconductors. The Newport facility has a very skilled operational team and has a crucial role to play to ensure continuity of operations. We look forward to building a future together”.

“The acquisition is great news for the staff here in Newport and the wider business community in the region as Nexperia is providing much-needed investment and stability for the future,” said Paul James, Operations Director at the Newport site

The Newport semiconductor production site was first established in 1982 and was originally named INMOS.

Current capacity is over 35,000 200 mm wafer starts per month covering a wide range of semiconductor technologies ranging from MOSFETs and Trench IGBTs using wafer thinning methods to CMOS, analogue and compound semiconductors.

National security?

Financial details of the deal were not disclosed, but two sources told CNBC that it’s worth around £63 million ($87 million), which is very cheap for a fab.

Concerns have also reportedly been raised that the UK is selling a prized asset to a Chinese-owned company at a time when there’s a global chip shortage that could last until 2023.

Tom Tugendhat, leader of the UK government’s China Research Group and chairman of the Foreign Affairs Select Committee, told CNBC on Monday that he’s very surprised the purchase is not being reviewed under the National Security and Investment Act.

“Having been in touch with partners in the US and around the world, I know I am not alone,” Tugendhat was quoted by CNBC as saying.

“The semiconductor industry sector falls under the scope of the legislation, the very purpose of which is to protect the nation’s technology companies from foreign takeovers when there is a material risk to economic and national security,” he reportedly said. “When the UK signed the Carbis Bay G7 communique, we pledged to take steps to build economic resilience in critical global supply chains, such as semiconductors. This appears to be an immediate and very public reversal of that commitment.”

Tugendhat pointed out that the government is “yet to explain why we are turning a blind eye to Britain’s largest semiconductor foundry falling into the hands of an entity from a country that has a track record of using technology to create geopolitical leverage.”

China concerns

It should be remembered that UK competition watchdog is investigating Nvidia’s $40 billion bid for Cambridge-based ARM, whose chip designs are used by chip manufacturers around the world.

That investigation was launched in January, and the government in April voiced its own national security concerns.

CNBC said the Wingtech acquisition comes after South Korea this month launched a review after Beijing-based Wise Road Capital agreed a deal to buy semiconductor firm MagnaChip.

In March, the Italian government blocked Chinese firm Shenzhen Investment Holdings from acquiring a controlling stake in LPE, a Milan-headquartered semiconductor company.

A UK government spokesperson told CNBC on Friday that it does “not consider it appropriate to intervene at this time” but that it will “continue to monitor the situation closely.”