The UK government has ordered a Chinese-owned company to unwind its takeover of Britain’s biggest chipmaker, citing national security concerns.
Nexperia, a Dutch subsidiary of Shanghai-listed semiconductor maker Wingtech, was told to sell “at least 86%” of its stake in Newport Wafer Fab by UK Secretary of State for Business, Energy and Industrial Strategy Grant Shapps, more than a year after taking control of the factory.
Shapps said in a statement that he was concerned that the company could start working on more advanced so-called “compound” semiconductors at the Newport site and about “the potential for those activities to undermine UK capabilities.”
Shapps also cited the location of the factory, which is part of an industrial cluster of highly specialized tech firms in Newport, a city in south Wales. “The links between the site and the cluster may prevent the cluster being engaged in future projects relevant to national security,” the government said.
The UK move illustrates growing concern in the West over Chinese links to critical technologies and infrastructure. Last week, the German government blocked the sale of a semiconductor factory to a Chinese-owned tech firm, citing national security concerns. The United States in August ordered two of its top chipmakers, Nvidia
(NVDA) and AMD
(AMD), to halt exports of certain high performance chips to China.
Germany blocks sale of chip factory to China over security fears
Nexperia said in a statement Wednesday that it was “shocked” by the decision and would appeal. It cited”two previous security reviews” that it said had already cleared the acquisition.
“Nexperia does not accept the potential national security concerns raised,” it said. “The far-reaching remedies which Nexperia offered to fully address the government’s concerns have been entirely ignored.”
The company added that it had offered “not to conduct” the “activities of potential concern, and to provide the UK government with direct control and participation in the management of Newport.”
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Nexperia’s UK manager, Toni Versluijs, said the company would fight to overturn the order, suggesting that it could put more than 500 jobs at risk.
“This decision sends a clear signal that the UK is closed for business,” he added.
Newport Wafer bills itself as the UK’s largest semiconductor facility, making more than 35,000 wafer starts a month. The factory has a background in supplying components to automotive and medical companies, according to Nexperia.
Nexperia is a semiconductor manufacturer based in Nijmegen, the Netherlands. It obtained full ownership of the Newport site in July 2021, after previously working with its former owners as a customer and as its second largest shareholder.
“We rescued an investment-starved company from collapse,” it said. “Those who sold the business to us agreed that it was the only viable solution, and the deal was publicly welcomed by the Welsh government.”
While terms of the deal were not disclosed, the transaction was valued at ?63 million (approximately $75 million), according to a UK parliament report.