UK blocks Chinese-led buyout of Newport Wafer Fab over national security concerns

The UK ordered China’s Wingtech Technology Co to undo its acquisition of Britain’s biggest microchip factory more than a year after the deal closed, citing national security concerns.

Wingtech’s Dutch subsidiary, Nexperia Holding, will be forced to sell the 86 per cent of Newport Wafer Fab in Wales that it bought in July 2021 in a deal worth about £63 million (US$75 million), a person familiar with the matter said at the time. It held a small stake before that date, prior to the new UK takeover rules.

Business Secretary Grant Shapps saw a risk to national security from “a potential reintroduction of compound semiconductor activities” at the site, referring to advanced chips used in applications such as electric vehicles, “and the potential for those activities to undermine UK capabilities,” according to the order published late on Wednesday.

The site’s importance to the so-called cluster of related business and research in south Wales was also a factor, the statement said.

It is the second Chinese takeover blocked by the UK’s new National Security and Investment Act, which came into force in January, and it is the first retrospective rejection of a deal. The decision shows increasing hostility to Chinese investment in the country after then-Business Secretary Kwasi Kwarteng vetoed a Hong Kong-based firm’s acquisition of an electronic design company in August.

Possible buyers for Newport Wafer Fab may be waiting in the wings, including a consortium led by Ron Black, the former chief executive officer of British chip design firm Imagination Technologies Group.

In an emailed statement, Nexperia said it was “shocked” by the decision, did not accept the national security concerns raised and would appeal to overturn the order. The company added the government had not engaged with it or its proposed remedies, such as offering UK officials direct control and participation.