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UK’s largest chip plant in Newport set to be bought by Chinese-owned firm

04 Jul 2021 5 minutes Read
Jaggery / Newport Wafer Fab / CC BY-SA 2.0

Newport Wafer Fab, the U.K.’s largest chip producer, is set to be bought by Chinese-owned semiconductor company Nexperia for around £63m  next week, according to CNBC.

The American TV business channel said they had spoken to two sources close to the deal who asked to remain anonymous because the information is not yet public.

CNBC’s Sam Shead said that Nexperia, a Dutch firm that is 100%-owned by China’s Wingtech Technology, told CNBC on Friday that the deal talks are ongoing.

Located in Duffryn, Newport, privately-held NWF’s chip plant dates back to 1982 and it is one of just a handful of semiconductor fabricators in the U.K.

It is located at a factory previously known as Inmos.

Nexperia is set to announce the takeover as soon as Monday or Tuesday, the sources said.

‘Constructive’

“We are in constructive conversations with NWF and Welsh Government about the future of NWF,” a Nexperia spokesperson said. “Until we have reached a conclusion we cannot further comment.”

NWF and Wingtech Technology did not immediately respond to CNBC’s request for comment.

The deal comes during a global chip shortage that has led countries to try and become more independent when it comes to semiconductor production.

The vast majority of today’s chips are manufactured in Asia, with Taiwan’s TSMC, South Korea’s Samsung and China’s SMIC among the largest chip producers in the world.

Tom Tugendhat, leader of the U.K. government’s China Research Group and chairman of the Foreign Affairs Select Committee, said he was concerned about a potential takeover of NWF in a letter to U.K. Business Minister Kwasi Kwarteng in June.

‘Concern’

“I must stress again that having the U.K.’s leading 200mm silicon and semiconductor technology development and processing facility being taken over by a Chinese entity – in my view – represents a significant economic and national security concern,” Tugendhat said.

He urged the U.K. government to review the deal under the National Security and Investment Act, which was introduced in April as part of an effort to protect the UK’s technology companies from overseas takeovers when there’s an economic risk or a security threat.

“This is the largest last remaining advanced semiconductor factory in England being sold to the Chinese and the British government aren’t doing s*** about it,” a source said, adding that they should at least try and get $1 billion for it.

Monitor

A U.K. government spokesperson told CNBC: “We are aware of the expected takeover by Nexperia of Newport Wafer Fab. While we do not consider it appropriate to intervene at this time, we will continue to monitor the situation closely and will not hesitate to use our powers under the Enterprise Act should the situation change.”

They added: “We remain committed to the semi-conductor sector, and the vital role it plays in the UK’s economy.”

The £63 million price tag for NWF is much lower than the $900 million that Texas Instruments announced it will pay for a vacant Micron fab Utah this week.

NWF has several outstanding debts, including £20 million with HSBC and £18 million with the Welsh Government, one of the sources said, adding that these will be paid off following the sale.

Meanwhile, Drew Nelson, the CEO who became NWF’s majority shareholder after he acquired the business from Germany’s Infineon four years ago, will receive around £15 million, according to one person familiar with the terms.

Advanced

NWF makes silicon chips that are used in power supply applications for the automotive industry, which has been hit particularly hard by the chip shortage. The company has also been developing more advanced “compound semiconductors,” which are faster and more energy efficient.

Under the deal, Nelson is being permitted to spin off the compound semiconductor part of NWF and he plans to reinvest his proceeds into this new venture, according to this person. He is also being permitted to keep the Newport Wafer Fab name.

The deal comes after Cambridge chip designer Arm, often thought of as the jewel in the crown of the U.K. technology industry, agreed to be bought by U.S. chip giant Nvidia for $40 billion.

‘Tensions’

The takeover, however, is being probed by regulators around the world after rival Qualcomm and others objected.

With tensions mounting between China and the world’s democracies, other countries are investigating Chinese tech takeovers before they’re approved.

Earlier this month, South Korea launched a review after Beijing-based Wise Road Capital agreed a deal to buy semiconductor firm MagnaChip, saying it is a “national core technology.”

The U.S. Department of Treasury also requested that parties involved in the transaction file notice with The Committee on Foreign Investment in the United States.

In March, the Italian government blocked Chinese firm Shenzhen Investment Holdings from acquiring a controlling stake in LPE, a Milan-headquartered semiconductor company, hailing it as a sector of “strategic importance.”

 

 

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Nick Randall-Smith
Nick Randall-Smith
2 months ago

If Wales had control of its own economy we could stop this asset stripping, Westminster will do nothing!

Gill Renfrew
Gill Renfrew
2 months ago

How?

The owners can sell it to who they want.

Nick Randall-Smith
Nick Randall-Smith
2 months ago
Reply to  Gill Renfrew

This is the problem of the UK and the structure of is economy. We have sold off many of our top quality assets (including our utilities) to foreign entities, this is not possible in most other other peer economies (German, France, Japan etc) where equity is held differently (eg: stake holder model in Germany). The UK has been selling off its assets to mask fundamental economic inefficiency for decades. An independent Wales may not be dominated by the short term financial returns culture of the City of London but more of the long term societal good model used in many… Read more »

Anthony Jones
Anthony Jones
2 months ago

Can someone please explain why the U.K. is still trading 2with a country that treats it’s population appalling and has no regard for human rights ? I feel that ALL trade with China should cease until the U.N. has undertaken a thorough investigation of conditions in China (please note, other oppressive states are available).

hdavies15
hdavies15
2 months ago
Reply to  Anthony Jones

Like the USA +UK combo that’s been ripping the guts out of Iraq for the last 18 years and making Afghanistan an even bigger sh*t hole than it ever was. No defence offered for Chinese hostility towards some of its Islamic citizens but successive UK governments could do with a long hard look in a mirror too. No monopoly on moral high ground in UK.

Chris
Chris
2 months ago
Reply to  Anthony Jones

Because the UK is just as bad but hides it better. It is currently supporting two genocides with British arms sales and training. It is knowingly and deliberately creating a hostile environment for asylum seekers (who are seeking refuge often from the wars and despots Britain profits from) and it is reducing its overseas aid at a time when people have never needed it more. It is also stealing devolved democracy from nations who voted for it in referendums. So these are the light headlines. We can go deeper and darker whenever you like. Britain are not “the Goodies” in… Read more »

Last edited 2 months ago by Chris
Anthony Jones
Anthony Jones
2 months ago
Reply to  Chris

I wouldn’t really disagree with either you or hdavies15 in fact between you you’ve answered my question. Corrupt and venial politicians in “functioning democracies” are still corrupt and venial.

David Russell
David Russell
2 months ago

Unfortunately there are too many Western Governments that are in bed with Communist China.
I often wonder how much money it costs to buy a politician these days.These traitors would sell their grandmothers in order to line their pockets.

j humphrys
j humphrys
2 months ago

Good idea for FM to nationalise, temporarily?, while NWE get on their feet. A university could also cooperate, as was done with Nokia? Sieze the time, for time is also a very precious commodity!

j humphrys
j humphrys
2 months ago
Reply to  j humphrys

Thinking on, who is to say the Chinese might also cooperate, as part of Xi’s belt and road initiative………….are we not also a land of the dragon, and a red one at that!

Andrew Collins
Andrew Collins
2 months ago

The idiot saying he’s concerned doesn’t even know where it is, England?

Jason Lane
Jason Lane
2 months ago

“This is the largest last remaining advanced semiconductor factory in England”.

Except that it’s in Wales.

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