Chinese buyout of Newport microchip plant a 'security risk'

The takeover of Britain's largest microchip plant by a Chinese-owned company must be reversed, the UK government has said.

Newport Wafer Fab was acquired by Dutch-based technology company Nexperia, a subsidiary of Shanghai listed Wingtech, in July 2021.

However, Nexperia must now sell 86% of its stake "to mitigate the risk national security" following a review.

The firm said it was "shocked" and will appeal against the decision.

The semiconductors, or chips, made there are used in a range of modern electronics from smartphones to household equipment and cars.

The deal came under scrutiny amid an ongoing global shortage of computer chips which has been exacerbated by the pandemic.

Concerns were raised that the home-grown technology, considered to be of strategic importance, would become more accessible to China under Nexperia.

In its decision, the UK government said the takeover of Newport Wafer Fab created two risks to national security.

The first related to Nexperia's development of the Newport site, which the government said could "undermine UK capabilities" in producing compound semiconductors.

The second, the plant's location as part of a semiconductor cluster on the Duffryn industrial estate, could "facilitate access to technological expertise and know-how".

It said the close links that existed in Newport "may prevent the cluster being engaged in future projects relevant to national security".

The Newport plant employs about 450 people and, at the time of the takeover, was producing about 35,000 wafers a year.

Nexperia said it invested £80m in the plant after taking control, investing in new machinery and hiring more staff.

The UK government had faced pressure to intervene, not least from the Commons Foreign Affairs Committee which said that Nexperia's takeover represents the sale of "one of the UK's prized assets" to a strategic competitor and potentially compromised national security.

A report in April said an investigation pledged by then-Prime Minister Boris Johnson by the National Security Advisor had not happened.

However, the decision was called in by the then-Business Secretary Kwasi Kwarteng in May on national security grounds.

It was left to his successor Grant Shapps to announce the decision following delays due to the changes in prime minister and the cabinet.

When the review was announced, Nexperia reiterated its commitment to the site, as well as another plant it operates in Manchester.