UK sends Chinese company to sell biggest British chip maker

The UK government has ordered a Chinese-owned company to scrap its acquisition of Britain’s biggest chipmaker, citing national security concerns.

Nexperia, a Dutch subsidiary of Shanghai-listed semiconductor maker Wingtech, has been instructed 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 the company could start work on more advanced so-called “composite” semiconductors at the Newport site and about “the potential of these activities to undermine UK capabilities”.

Shapps also cited the factory’s location, which is part of an industrial cluster of highly specialized technology companies in Newport, a town in south Wales.

“Links between the site and the cluster may prevent the cluster from engaging in future projects relevant to national security,” the government said.

The UK move illustrates growing concern in the West about Chinese links to technology and infrastructure companies.

Last week, the German government blocked the sale of a semiconductor factory to a Chinese technology company, citing national security concerns.

In August, the United States ordered two of its main chipmakers, Nvidia and AMD, to suspend exports of certain high-performance chips to China.

Nexperia said in a statement on Wednesday that it was “shocked” by the decision and would appeal. He cited “two previous security reviews” that he said had already cleared the acquisition.

“Nexperia does not accept the potential national security concerns raised,” he said. “The far-reaching remedies that Nexperia offered to fully address the government’s concerns were totally ignored.”

The company added that it had offered to “not conduct” the “activities of potential concern and provide the UK government with direct control and participation in the management of Newport”.

Nexperia’s UK manager, Toni Versluijs, said the company would fight to overturn the order, suggesting 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 calls itself the UK’s largest semiconductor facility, producing over 35,000 wafers a month. The factory has experience supplying components to automotive and medical companies, according to Nexperia.

Nexperia is a semiconductor manufacturer based in Nijmegen, the Netherlands. It gained full ownership of the Newport site in July 2021 after previously working with its former owners as a client and as its second largest shareholder.

“We rescued a company in need of investment from collapse,” he said. “Those who sold us the business 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 report by the UK parliament.