UK orders security review into Chinese takeover of Welsh chip fab

Last year, it emerged that Nexperia – a Dutch chip firm wholly owned by Shanghai-based Wingtech – had confirmed plans to acquire the UK’s largest chip producer, Newport Wafer Fab, in a deal valued at £63m.

But in April, MPs expressed concern that a security review into the purchase of the plant had still not been carried out despite possible links between Nexperia and the Chinese state government.

The government has powers under the National Security and Investment Act 2021 to scrutinise and intervene in acquisitions such as these on national security grounds.

“We welcome overseas investment, but it must not threaten Britain’s national security,” Kwarteng said on Twitter.

The Newport site produces over 35,000 200mm wafer starts per month, covering a wide range of semiconductor technologies. Its chips are used in power supply applications for the automotive industry, which has been struck hard by the ongoing chip shortage.

Prime Minister Boris Johnson said last year he did not want to drive Chinese investment away from Britain because of “anti-China spirit”, when asked whether the sale of the semiconductor producer would go ahead.

The government has 30 working days, with a possible extension of up to a further 45 working days, to carry out its assessment.

The Department for Business, Energy & Industrial Strategy said that the process is already underway.

In April, the chair of the Foreign Affairs Committee, Tom Tugendhat MP, said: “For over a year, the Committee has voiced its concern over the takeover of semiconductor manufacturer Newport Wafer Fab. The National Security and Investment Act has been in place for over three months yet we’ve seen no evidence of its use.

“Semiconductors are essential to every aspect of modern life and Newport Wafer Fab is one of the country’s leading manufacturers. Their takeover by Nexperia left many wondering why we are, seemingly, handing over critical security infrastructure to overseas companies with well-documented links to the Chinese state.

“The long-term security of our nation relies not just on our Armed Forces but on the resilience of our economy and that means ensuring our future stability is never sacrificed for the sake of short-term advancement.”

In 2021, executives of Acer and Intel said they expected the global semiconductor shortage to continue until at least 2022, affecting most industries which rely on chips for manufacturing.