Chinese takeover of biggest UK chip plant blocked by government

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

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The British government has blocked the takeover of the country’s largest microchip factory by a Chinese company, fearing it could harm 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 company it acquired for 63 million pounds ($75 million).

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

“The effect of the order is to require Nexperia BV to sell at least 86% of NNL within a specified period and following a specified process,” the UK Department for Business, Energy and Industrial Strategy said in a statement. a statement.

Nexperia initially owned 14% of Newport Wafer Fab, but on July 5, 2021 increased its stake to 100%.

“We welcome foreign trade and investment that supports growth and jobs,” Shapps tweeted Wednesday. “But where we identify a national security risk, we will act decisively.”

Toni Versluijs, Nexperia’s UK country manager, said he believed the decision was wrong and the company was considering appealing.

“We are truly shocked,” Versluijs said in a statement Wednesday. “The decision is wrong and we will appeal to overturn this assignment order to protect the more than 500 jobs in Newport.”

Government officials and lawmakers have expressed concern that the UK is selling a valuable asset to a Chinese company at a time of a global shortage of semiconductors, which continues and is expected to last until 2024.

Britain launched a national security investigation into the Nexperia deal earlier this year, using powers that allow it to review and block takeovers or foreign investment in sensitive sectors.

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

Although not a particularly large undertaking, Newport Wafer Fab runs Britain’s largest chip fab, producing some 32,000 wafers each month.

Nations are increasingly seeking to reclaim control of strategically important industries such as semiconductors after widespread supply chain disruptions revealed overreliance on China as a hub world of manufacturing.

The move could further worsen relations between the UK and China, which are already at an all-time low following London’s decisions to ban Huawei 5G equipment and grant Hong Kong residents special UK visas that would eventually lead to to citizenship.

The UK has already investigated Nvidiathe acquisition of Arm, a crucial chip design company, for national security reasons. The acquisition was abandoned by the US semiconductor giant in February.

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