MPs want explanation for slow review of China's Welsh chip fab purchase

The Foreign Affairs Committee has demanded an explanation as to why a review into the purchase of a Welsh semiconductor fab by a Chinese firm has not been completed, months after Prime Minister Boris Johnson ordered it in July last year.

Tom Tugendhat MP, the chair of the Foreign Affairs Committee, said the Committee has expressed its concern over the deal - between Newport Wafer Fab (NWF) and Nexperia - for over a year, but the Government is yet to provide any details on its findings.

He went on to say, "The Prime Minister's assurances that work is under way are welcome. However, so few details have been provided to the Committee, that we are left with the unfortunate conclusion that no review has taken place."

Mr Tugendhat added

"The National Security and Investment Act [which gives the Government the power to scrutinise and intervene in business transactions to protect national security] has been in place for over three months yet we've seen no evidence of its use.

"Semiconductors are essential to every aspect of modern life and Newport Wafer Fab is one of the country's leading manufacturers. Their takeover by Nexperia left many wondering why we are, seemingly, handing over critical security infrastructure to overseas companies with well-documented links to the Chinese state."

The Government has the tools to perform the review, Tugendhat said, it just needs to use them.

Nexperia, a Dutch company owned by China's Wingtech Technology, said in July last year that it was acquiring the Newport facility in a deal that would help it to make more chips and keep pace with semiconductor demand globally.

While both companies said they were 'excited' about the £63 million deal, the announcement was met with concern across the UK.

Market watchers were uneasy at the government's approval of the sale of a key asset to a Chinese-owned firm amid a global chip shortage, which could last for years.

China is currently trying to attain self-sufficiency in chip manufacturing. The country has faced US sanctions for the past three years, which prohibit Chinese firms from buying chips made with American technology.

NWF, which employs 450 people, makes semiconductor wafers at its plant in Newport and Duffryn. It is capable of creating power and compound semiconductor ICs on 200mm-diameter wafers, producing around 35,000 wafers a month.

Following the uproar over the NWF transaction, Prime Minister Boris Johnson appointed National Security Adviser Sir Stephen Lovegrove to investigate the buyout.

Last week, Politico reported that the government had 'quietly approved' the sale of NWF. The article claimed that ministers had decided not to interfere in the acquisition of NWF, following a Lovegrove's review.

Ruth Jones, Labour MP for Newport West, said she was writing to the Department for Business, Energy and Industrial Strategy requesting immediate clarification on the issue.

Former Conservative leader Sir Iain Duncan Smith termed the decision to sell the facility "ridiculous."

Nexperia said it was unaware of 'such a decision' and that it had not heard from the UK government on the issue since July. The company had previously said it was willing to co-operate with the Government on any review.

The Foreign Affairs Committee says the deal is effectively the sale of one of the UK's prized assets to a strategic rival, which could potentially compromise national security.

Tugendhat said the UK's long-term security depends not just on the nation's Armed Forces, but also on the robustness of its economy, which means the UK's future stability should never be "sacrificed for the sake of short-term advancement."