PM Orders Review Of Chinese Acquisition Of Newport Wafer Fab

The acquisition of the UK’s largest chip producer by a Dutch firm that is owned by a Chinese entity, has drawn the attention of the British government.

Prime Minister Boris Johnson has ordered a review of the acquisition of Newport Wafer Fab, which is based in Newport, Wales.

Chinese firm Wingtech had announced on Monday that its Dutch chip entity Nexperia was acquiring Newport Wafer Fab for an undisclosed amount, reportedly around £63 million ($87 million), which if true, is an incredibly cheap price for a fab.

National security

Concerns were raised earlier this week that the UK was 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.

Tugendhat pointed out that the British 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.”

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

But it seems that the British government has since reconsidered its position on the acquisition of the UK’s largest fab.

Prime Minister Boris Johnson on Wednesday said the government will review the purchase of the UK’s largest producer of semiconductors by a Chinese-owned manufacturer, the Guardian newspaper reported.

Johnson said on Wednesday that he had asked his national security adviser to review the purchase of Newport Wafer Fab by Nexperia.

It came only a day after the Welsh secretary said he was “satisfied” that security risks had been taken into account, in answer to criticism from Labour and Conservative MPs.

The deal was also backed by local council officials in Wales.

China concerns

The semiconductor sector has risen in geopolitical prominence, as China has targeted it as a key technology for the future economy, the Guardian reported.

It should be remembered that UK competition watchdog is currently 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, despite the fact that Nvidia is an American firm.

The UK however is not the only country questioning purchases by Chinese firms.

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.