Newport Wafer Fab: Government to review buyout deal

The Government now has 30 days to complete an assessment under the National Security Act.

The UK Government will review the sale of Britain's largest microchip factory Newport Wafer Fab (NWF) to Chinese-led business Nexperia.

The Government will review the planned acquisition under the new National Security and Investment Act, which came into effect at the start of the year, according to Business Secretary Kwasi Kwarteng.

The Government now has 30 working days to make a decision, with the option to extend the timeline for an additional 45 working days.

They may then block the deal, seek remedies or approve it.

The Government said it 'has powers under the National Security and Investment Act 2021 to scrutinise and - if necessary - intervene in qualifying acquisitions on national security grounds.'

"We welcome overseas investment, but it must not threaten Britain's national security," Kwarteng said on Twitter.

Nexperia, which has its headquarters in the Netherlands, is a subsidiary of China's partially state-backed Wingtech.

The company said in July 2021 that it was acquiring the Newport facility in a £63 million deal that would help it to make more chips and keep pace with semiconductor demand globally.

Both companies expressed excitement about the agreement, but the news was met with scepticism across the UK.

Market experts are concerned about the Government's approval of the sale of a crucial asset to a Chinese-owned company, especially in the midst of a worldwide semiconductor shortage, which is expected to continue for years.

NWF employs around 450 workers at its Newport and Duffryn plants. The firm is capable of creating power and compound semiconductor integrated circuits (ICs) on 200mm-diameter wafers, producing around 35,000 wafers a month.

The firm also supplies chips to the UK Government, including as part of military contracts.

Following the controversy over the deal last year, Prime Minister Boris Johnson instructed Sir Stephen Lovegrove, the National Security Adviser, to conduct a probe.

Reports emerged that the Government had 'quietly approved' the sale of NWF in April. It was claimed that ministers had decided not to interfere in the acquisition following Lovegrove's review.

Ruth Jones, Labour MP for Newport West, said she will write to the Department for Business, Energy and Industrial Strategy to seek clarity on the matter.

Sir Iain Duncan Smith, the former Conservative leader, called the decision to sell the plant "ridiculous."

Lawmakers criticised the Government for being sluggish to take action on the sale, at a time when other countries are developing their domestic semiconductor capabilities amidst the global chip shortage.

Last month, the Foreign Affairs Committee demanded an explanation for why a review into the purchase had not been completed - months after Boris Johnson ordered it in July last year.

The Foreign Affairs Committee head, Tom Tugendhat, said the Committee had raised its concerns over the transaction, but the Government has yet to provide any details on its findings.

Last year, Johnson said he did not want anti-China sentiments to push Chinese investment away from the UK.

Tugendhat said the UK's long-term security depends not just on its armed forces, but also on the strength of its economy. He indicated that the country's future stability should never be "sacrificed for the sake of short-term advancement."