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Largest chip factory in the UK acquired by China’s Nexperia

Nexperia – a Dutch chip company wholly owned by Shanghai-based Wingtech – this week confirmed plans to acquire the UK’s largest chip maker, Newport Wafer Fab (NWF).

Nexperia – a client of NWF’s foundry services – became the second largest shareholder in 2019. It has now completed the transaction to acquire 100 percent ownership of the semiconductor manufacturing facility, the UK’s largest.

NWF is renamed Nexperia Newport. NWF is primarily based in Wales, with smaller manufacturing operations in Manchester and Hamburg. The fab was first built in 1982 for Inmos to manufacture transputers.

It became NWF in 2017 and has received government support as part of an effort to develop South Wales as a center of excellence in compound semiconductors, which are faster and more energy efficient.

When NWF recently failed to meet certain terms of its supply contract with Nexperia, the partial owner exercised its right to appoint board members and thus lead the company. The Newport facility produces more than 35,000 200mm wafer starts per month, covering a wide range of semiconductor technologies.

The chips are being used in power supply applications for the automotive industry, which has been hit hard by the ongoing chip shortage. While financial details of the deal have not been disclosed, CNBC reports that it is worth around £63 million.

NWF’s outstanding debts, including £20 million with HSBC and £18 million with the Welsh Government, will be paid after the sale. CNBC quoted a Forrester analyst as saying: “A £63 million price tag for a wafer fab is minuscule. Most waffle factories cost more than £1 billion.

Even if this is older technology, this deal is ridiculously cheap.” By comparison, last week Texas Instruments announced it would buy a Micron plant in Utah for $900 million (£650 million). Nexperia said it would “maintain a strong foothold in the Welsh ecosystem and technological development and secure current jobs at the Newport site”.

Under new ownership, it will help Nexperia meet the rising demand for chips and enrich its analog, power and mixed signal capabilities. Achim Kempe, chief operating officer, Nexperia, said: “We are very pleased to include Newport as part of our global manufacturing footprint.

Nexperia has ambitious growth plans and the addition of Newport supports growing global demand for semiconductors.

The Newport facility has a highly skilled operations team and plays a vital role in ensuring the continuity of operations. We look forward to building a future together.”

Paul James, general manager of the Newport site, added: “The acquisition is great news for the workforce here in Newport and the wider business community in the region as Nexperia provides much needed investment and stability for the future.

We look forward to being part of the global Nexperia team and keen to maintain the current workforce. Additional local resources may also be required. We are also happy that we can continue to contribute to the local ecosystem.

” Under the terms of the deal, former NWF CEO Drew Nelson would be able to divest off the compound semiconductor portion of the foundry, while retaining the NWF brand. Nelson commented:

“The change of ownership of the Newport site marks an important step for both the future of the facility and the region. We are pleased to maintain the expertise in developing high-performance silicon devices in the 200mm wafer factory, while opening opportunities for us to add new semiconductor technologies.

” News of the takeover has been met with criticism that the UK government is not interfering in the sale of Britain’s largest chip foundry to a Chinese company amid a global chip shortage.

Tom Tugendhat, chairman of the Foreign Affairs Select Committee and China Hawk, told CNBC he was surprised the purchase is not being reviewed under the new National Security and Investment Act, which tightens rules around foreign investment in strategically important British industries and makes it easier.

makes for the government to block deals that could pose a national security risk. An investigation was launched in January into the acquisition of Nvidia’s $40 billion bid for Cambridge-based Arm, which designs the industry-standard chip architecture found in all categories of devices.

“After interacting with partners in the US and around the world, I know I’m not alone [with these concerns],” Tugendhat said.

“The semiconductor industry sector falls within the scope of the legislation, which is specifically designed to protect the country’s technology companies from foreign takeovers when there is a material risk to economic and national security.

“When the UK signed the Carbis Bay G7 communiqué, we pledged to take steps to build economic resilience in critical global supply chains, such as semiconductors.

This appears to be an immediate and very public reversal of that commitment.” Earlier this month, South Korea launched an investigation after Beijing-based Wise Road Capital struck a deal to buy semiconductor company MagnaChip, describing semiconductors as a “national core technology”.

In March, Italy blocked Shenzhen Investment Holdings from acquiring a majority stake in Milan-based semiconductor company LPE, calling the sector one of “strategic importance”. A Welsh Government spokesman said:

“Today’s announcement will secure 400 jobs and lead to a further significant investment in the facility, including in new equipment to help the business grow.

As part of this, the Welsh Government will get back its initial investment plus interest. Issues of Chinese property are a matter for the British government.”