Chinese takeover of biggest UK chip plant blocked by government

The global chip shortage will continue, and consumers will have to pay for it, an analyst from the International Data Corporation said.

Sasirin Pamai | Istock | Getty Images

The U.K. government has blocked the takeover of the country’s largest microchip factory by a Chinese-owned firm over concerns it may undermine national security.

Grant Shapps, minister for business, energy and industrial strategy, on Wednesday ordered Dutch chipmaker Nexperia to sell its majority stake in Newport Wafer Fab, the Welsh semiconductor firm it acquired for £63 million ($75 million).

Nexperia is based in the Netherlands but owned by Wingtech, a partially Chinese state-backed company listed in Shanghai. Nexperia completed its acquisition of Newport Wafer Fab in 2021, and the firm subsequently changed its name to Nexperia Newport Limited, or NNL.

“The order has the effect of requiring Nexperia BV to sell at least 86% of NNL within a specifified period and by following a specified process,” the U.K.’s Department for Business, Energy and Industrial Strategy said in a statement.

Nexperia had initially owned 14% of Newport Wafer Fab but on Jul. 5, 2021, upped its stake to 100%.

A Nexperia representative was not immediately available for comment when contacted by CNBC outside of usual business hours.

Government officials and lawmakers expressed concerns that the U.K. was selling a prized asset to a Chinese-owned company at a time of global shortages in semiconductors, which are still ongoing and expected to last until 2024. A national security probe into the deal was launched earlier this year.

The British government said Wednesday that the location of the Newport facility, part of a strategically important cluster of semiconductor expertise in Wales, was ultimately a national security concern.

Though not a particularly large company, Newport Wafer Fab runs Britain’s largest chipmaking facility, producing some 32,000 silicon wafers each month.

Nations are increasingly seeking to claw back control of strategically important industries such as semiconductors after widespread supply chain disruptions exposed an overreliance on China as a global manufacturing hub.

The move could further sour U.K.-Sino relations, which are already at a low point following moves from London to ban Huawei 5G equipment and grant people in Hong Kong special British visas that would eventually lead to citizenship.

The U.K. has previously investigated Nvidia‘s acquisition of Arm, a crucial chip design company, over national security concerns. The acquisition was shelved by the U.S. semiconductor giant in February.

Related Articles

Back to top button