Three years after Chinese investors attempted to buy the UK’s biggest chip plant, the government has ruled against them on national security grounds. The deal was blocked because of fears that it would leave China with access to sensitive technology used in military-grade chips. This marks the first time that Britain has intervened to block such an acquisition, but it leaves many questions unanswered as to why more deals haven’t been blocked in the past.
The U.K. Due to worries that it would jeopardise national security, the government has prevented a Chinese-owned company from acquiring the nation’s largest semiconductor manufacturer.
The majority share that Dutch chipmaker Nexperia owns in Newport Wafer Fab, the Welsh semiconductor company it purchased for £63 million ($75 million), must be sold, according to Grant Shapps, minister for business, energy, and industrial development.
Although Nexperia is situated in the Netherlands, Wingtech is its owner.
, a Shanghai-listed corporation with some official support from China. After completing the purchase of Newport Wafer Fab in 2021, Nexperia changed the company’s name to Nexperia Newport Limited, or NNL.
The UK’s Department for Business, Energy and Industrial Strategy stated in a statement that the order “has the effect of forcing Nexperia BV to sell at least 86% of NNL within a set term and by following a specified procedure.”
In July 2021, Nexperia increased its ownership in Newport Wafer Fab to 100% from its initial 14% ownership.
Shapps tweeted on Wednesday, “We welcome foreign trade & investment that fosters development & jobs.” But when a threat to national security is detected, we will take prompt action.
Toni Versluijs, a U.K.-based representative for Nexperia The ruling was erroneous, according to the country manager, and the business intends to appeal.
In a statement released on Wednesday, Versluijs stated, “We are sincerely astonished. To safeguard the more than 500 employment at Newport, we will file an appeal to get the verdict reversed.
Government representatives and MPs voiced worry that the UK was selling a treasured asset to a Chinese-owned corporation during existing and anticipated chip shortages worldwide through 2024.
Earlier this year, the United Kingdom used its authority to evaluate and halt foreign takeovers and investments in key industries to begin a national security investigation into the Nexperia purchase.
The location of the Newport factory, which is a part of a strategically significant cluster of semiconductor knowledge in Wales, the government claimed on Wednesday, eventually contributed to the perception that the takeover constituted a national security threat.
Despite not being a particularly large business, Newport Wafer Fab operates the biggest chip manufacturing plant in Britain, producing about 32,000 silicon wafers each month.
After major supply chain disruptions highlighted an overreliance on China as a global manufacturing hub, nations are increasingly attempting to regain control of strategically significant industries like semiconductors.
The action might further deteriorate U.K.-Sino ties, which are already at an all-time low following London’s decisions to exclude Huawei 5G technology and offer Hong Kong residents special British visas that would eventually lead to citizenship.
Due of worries about national security, the U.K. previously looked at Nvidia’s acquisition of Arm, a significant chip design business. The American semiconductor juggernaut put the purchase on hold in February.