The UK government has vetoed the takeover of a Welsh semiconductor manufacturer by a Chinese company on the grounds of national security.
Nexperia BV, a Netherlands-based subsidiary of China’s Wingtech, has been told it must sell at least 86% of Newport Wafer Fab, which it bought in July last year.
A ‘final order’ was issued overnight pursuant to the National Security and Investment Act 2021 by Grant Shapps on behalf of the department for Business, Investment & Industrial Strategy (BEIS).
The risks to national security were said in a statement to relate to “technology and know-how that could result from a potential reintroduction of compound semiconductor activities … and the potential for those activities to undermine UK capabilities”.
Also, Newport Wafer’s site location “could facilitate access to technological expertise and know-how” from other industrial companies that share ideas and collaborate in projects as part of the South Wales Cluster, with the statement claiming that links between the site, if Chinese owned, and the cluster “may prevent the Cluster being engaged in future projects relevant to national security”.
The BEIS launched a review of the deal following pressure from parliament and outside, with the Commons Foreign Affairs Committee warning the deal represented “the sale of one of the UK’s prized assets to a strategic competitor and potentially compromises national security”.
US president Joe Biden's administration also launched a 'chip war' against China in recent months, with Washington telling US companies to stop supplying Chinese tech companies with equipment to make advanced chips, in an attempt to try and slow developments in computing and weapons.
According to the BEIS statement, Nexperia BV has to sell at least 86% of the Newport business “within a specified period and by following a specified process”.
Toni Versluijs, head of Nexperia’s UK arm, said: "We are genuinely shocked. The decision is wrong, and we will appeal to overturn this divestment order to protect the over 500 jobs at Newport.
"The decision is disproportionate given the remedies Nexperia has proposed. It is wrong for the employees, for the UK semiconductor industry, for the UK economy and for the UK taxpayer - who could now be faced with a bill of over £100m for the fallout from this decision.
"We rescued an investment-starved company from collapse. We have repaid taxpayer loans, secured jobs, wages, bonuses and pensions and agreed to spend more than £80m on equipment upgrades. The deal was publicly welcomed by the Welsh government."