UK PM Boris Johnson has asked the national security adviser to investigate Chinese-owned Nexperia's acquisition of Newport Wafer Fab

UK To Investigate Chinese-Owned Nexperia's Acquisition Of Largest British Chip Plant

by Bhaswati Guha Majumder - Thursday, July 8, 2021 05:48 PM IST
UK To Investigate Chinese-Owned Nexperia's Acquisition Of Largest British Chip PlantChinese semiconductor company Nexperia
  • Soon after Chinese-owned semiconductor company, Nexperia announced the acquisition of the UK's largest semiconductor plant Newport Wafer Fab, the UK's National Security Adviser decided to investigate the matter.

After the lawmakers in the United Kingdom warned that the takeover of the country's largest semiconductor plant by a Chinese-owned corporation could jeopardise Britain's hi-tech future, the National Security Adviser has decided to investigate the matter. The alarm was raised soon after Nexperia announced the acquisition of Newport Wafer Fab, a semiconductor manufacturer primarily for the automotive industry situated in Wales, on 5 July.

Prime Minister Boris Johnson told Parliament on 6 July that the British government is currently looking into the issue, and he asked the National Security Adviser to review it. According to the Enterprise Act in the United Kingdom, the government has 30 days to either approve or reject the agreement for further scrutiny. According to a December 2019 press release by the company in question here, Wingtech Technology, a Chinese computer and telecom equipment manufacturer, officially obtained a controlling stake in Nexperia from Beijing Jianguang Asset Management Co. Ltd.

In terms of the British company, apart from supplying automotive plants, Newport Wafer has focused on manufacturing more complex compound semiconductors, which are at the heart of technologies like 5G and face recognition. Several United Kingdom universities have strong affiliations to this corporation, which is one of the largest fabrication plants in the country where semiconductors are made. This company has an annual revenue of more than $68 million.

As reported by the South China Morning Post, the British Prime Minister told the parliament that Stephen Lovegrove, who is the National Security Adviser, will determine if the items they are producing have actual intellectual property value and interest to China, as well as whether they have serious security concerns. However, former Conservative Party leader Iain Duncan Smith said: "The government needs to call this in and block it. This yet again shows that despite the legislation, despite all the earlier tough talk, the government is looking two ways on China. This sale is an investment disaster".

According to the report, if the UK turns around, the latest agreement may enrage Beijing and signify a tightening of Britain's position on Chinese investments in the chip industry. After the United States restricted operations of several China-based technology companies in the UK, Johnson also barred the Chinese tech giant Huawei Technologies from participating in its 5G wireless network, and since then, the British government has tended to be more lenient with the chip industry arrangements.

Meanwhile, in 2021, a new law was passed that gives the powers to the government to intervene if enterprise takeovers are deemed a threat to national security. Ministers will have five years to scrutinise transactions and will have the authority to unravel them if a threat is found.

In the case of the ties between Nexperia and Newport Wafer, the Chinese owned company has been a customer of the Wales-based firm for several years. According to a spokesperson from the Netherlands-based Nexperia: "Newport has a proven track record and has unparalleled experience with advanced power and semiconductor technologies. With the acquisition, Nexperia is guaranteeing its own supply chain".

Even though the financial details of the deal were not disclosed, according to the report by CNBC, it is worth around $87 million. However, while referring to the Newport Wafer's new agreement, former cabinet minister and Conservative Party MP Damian Green said: "I think this should be called in under the legislation. It's clear this type of manufacturing facility lies at the heart of many industries of the future and it will be very important to our long-term resilience as a hi-tech country".

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