The acquisition of the 海角视频’s largest microchip manufacturer, Newport Wafer Fab (NWF), by Chinese-owned firm Nexperia has been questioned by Welsh Conservative Shadow Minister for Technology Natasha Asghar.
Amsterdam-based Nexperia, which is owned by Shanghai Stock Exchange listed Chinese tech firm Wingtech, acquired the Newport-based facility earlier this month in a £63m deal which safeguarded nearly 500 jobs.
Having already invested in the NWF which gave it a minority stake in 2019, it said concerns over the plant’s ability to meet a significant supply contract to it, left it with no alternative but to trigger a takeover clause it had previously negotiated.
Prime Minister Boris Johnson has asked his national security adviser Sir Stephen Lovegrove to examine the sale.
Read More: Nexperia on the deal
The Commons Foreign Affairs Committee has called for tougher action so that strategically important firms like NWF should “not be up for sale.”
Moreover, former chief executive of the National Cyber Security Centre Ciaran Martin, said the sale of NWF posed a greater threat to Britain’s interests than Huawei’s involvement in the 5G network. Last year, after considerable pressure applied by the then Trump administration, the 海角视频 Government took the decision to remove the Chinese tech from 5G network by 2027.
Mr Martin said: “Huawei in the periphery of 5G only really mattered because the Trump administration became obsessed with it for reasons they never convincingly set out.
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“By contrast the future of semiconductor supply is a first order strategic issue. It goes to the heart of how we should be dealing with China.”
Responding to his comments, Ms Asghar, said: "Whilst I welcome thriving businesses and job creation in my region, there are legitimate concerns over the buyout of the 海角视频’s largest silicon chip producer to the Chinese-backed company and rightly so.
“Mr Martin’s comments on Newport Wafer Fab and the influence of China are alarming and we must ensure our nation’s technology companies are protected from foreign takeovers when there is a genuine material risk to economic and national security.”
Welsh Secretary Simon Hart said that government due diligence was undertaken on the deal.
He added: “The Prime Minister has asked for that to be doubled checked and I think that is perfectly reasonable and is not completely uncommon. What has been triggered is a legal right which was contained in that original share arrangement, so it is not as if the company has suddenly been taken over by a Chinese interest that was never there, as it has been there for sometime.
“However, due diligence was done and BEIS (海角视频 Government department) was content. The Prime Minister has asked for due diligence to be double checked and that is being done and we will get a view on that in a matter of days or weeks.”
The 海角视频 Government has powers to intervene in matters where a public interest is engaged under the Enterprise Act 2002 and for reasons of possible risk to national security under the National Security and Investment Act 2021.
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The Competition and Mergers Authority (CMA) said it couldn’t comment on whether it is considering investigating the acquisition on 海角视频 market domination grounds. Nexperia also has a microchip facility in Manchester.
NWF is a key industrial partner in the Cardiff Capital Region’s compound semiconductor cluster, The growing network of regional industry partners also including tech firms such as IQE, SPTS Technologies, Microchip and yes Newport Wafer Fab. Its early stage research capacity is being backed with partners in Swansea and Cardiff universities.
Newport Wafer Fab has not benefited directly from City Deal funding.
A spokesperson for the Cardiff Capital Region said: “The Cardiff Capital Region is not and never has been an investor in Newport Wafer Fab. We welcome Nexperia Newport to the region, and see the change in ownership as being important in preserving the site and high skill jobs in a critical global sector.
“We will continue to work with government partners and through the region’s cluster body CS Connected to ensure the right conditions are in place for this cluster to continue to grow and flourish.”
Nexperia said it had no choice but to trigger a 100% acquisition clause of NWF, following its investment in 2019, as ensure that the business remained solvent. The acquisition saw the Welsh Government receiving the £13m loan, and interest in full, it has provided to back a management buy-in buyout of NWF back in 2016 from German firm Infineon
A Nexperia spokesman said: “We have been a customer of Newport Fab for some time and provided equity investment to the company in 2019 as its second largest shareholder in order to ensure that they could stay solvent. In exchange for this significant financial commitment, like any sensible company would have done, we asked for protection rights including the right to appoint board members if the company came into financial difficulty again.
“It was however only when they came to us and told us that they may collapse in Q1 of this year that we decided we had no choice except to step in whereupon we voluntarily repaid Newport’s debt to the Welsh Government, rescued the company from potential administration, secured 500 jobs and rescinded the salary freeze that had been placed upon its employees.”
It now plans further investment in the plant.
A 海角视频 Government spokesman said: “We have considered this issue thoroughly, and will continue to monitor the situation closely. The National Security Adviser is reviewing this case and we will not hesitate to take further action if needed. We remain committed to the semi-conductor sector, and the vital role it plays in the 海角视频’s economy.”