Paul van Gerven
17 November

Nexperia is appalled at the UK government’s decision to reverse the takeover of a Welsh wafer fab. In an unusually strongly worded statement, the chipmaker vows to appeal.

The UK government, citing security concerns, has ordered Nexperia to reduce its ownership in the Newport Wafer Fab (NWF) to 14 percent, which is the stake the company held before acquiring the firm in 2021. Nexperia said it’s “shocked” by the decision and intends to appeal. “Nexperia doesn’t accept the national security concerns raised. The far-reaching remedies that Nexperia offered to fully address the government’s concerns have been entirely ignored,” the company writes in a statement.

The 40-year-old 200mm wafer fab in South Wales was struggling, even facing bankruptcy before the acquisition. But, being one of the last remaining semiconductor manufacturing facilities in the UK and anxieties about Chinese involvement in companies on the rise, its takeover last year triggered a political backlash. Nexperia is a subsidiary of China’s Wingtech Technology, which is reportedly partly owned by the Chinese government. Both Nexperia and Wingtech, however, insist they operate independently.

Following a series of probes and reviews over Chinese involvement, the UK’s Secretary of State for Business, Energy and Industrial Strategy has now decided that the acquisition poses a national security risk. Secretary Grant Shapps says the risk relates to “technology and know-how that could result from a potential reintroduction of compound semiconductor activities” at the site and “the potential for those activities to undermine UK capabilities.” The NWF previously developed compound semiconductor applications that might have military uses. The acquisition could also “facilitate access to technological expertise and know-how” present in the local industrial cluster of which the NWF is part, Shapps asserts.

Nexperia says it offered not to conduct the compound semiconductor activities of potential concern and to provide the UK government with direct control and participation in the management of Newport. According to the chipmaker, which also operates a former Philips facility in Manchester, the UK government has refused to engage in talks over the matter. “There has been no dialogue between the government and Nexperia on these proposals. The government hasn’t visited Newport, hasn’t spoken with the over 500 employees whose jobs are now at risk and none of the three responsible Secretaries of State have responded to Nexperia’s requests for dialogue,” reads a statement.

Newport Wafer Fab
Credit: Newport Wafer Fab/Nexperia

Blockade

“We’re genuinely shocked. The decision is wrong, and we will appeal to overturn this divestment order to protect the over 500 jobs at Newport,” says Toni Versluijs, Nexperia’s UK Country Manager. Two months ago, the NWF’s staff association sent a letter to The Times urging the government not to intervene in the sale and saying it “fully supports” Nexperia’s ownership of the site.

“We’re hugely disappointed by this extraordinary U-turn and the greater uncertainty that it creates for our employees and their families in Wales whilst also not recognizing the commitment of our 1,000 employees in Manchester. As a globally successful European-centered company, with our roots at Royal Dutch Philips and proud, 90-year track record in Britain, it’s astonishing that our employees face such jeopardy and hundreds of millions of pounds of foreign direct investment are not welcome,” Versluijs adds.

It’s been previously reported that several investment firms, in anticipation of a government blockade, have been preparing a bid on the NWF.