Newport Wafer Fab to be acquired by Chinese company Nexperia

LONDON – UK’s biggest chip maker Newport Wafer Fab is set to be acquired by Chinese semiconductor company Nexperia for around £ 63million ($ 87million) next week, two close sources say of the agreement who asked to remain anonymous because the information is not yet public.

Nexperia, a Dutch company 100% owned by Chinese company Wingtech Technology, told CNBC on Friday that talks were underway.

Located in Newport, South Wales, NWF’s private chip factory dates back to 1982 and is one of a handful of semiconductor manufacturers in the UK.

Nexperia is expected to announce the takeover as early as Monday or Tuesday, the sources said.

“We are in constructive talks with the NWF and the Welsh government on the future of the NWF,” said a spokesperson for Nexperia. “Until we have reached a conclusion, we cannot comment further.”

NWF and Wingtech Technology did not immediately respond to CNBC’s request for comment.

The deal comes amid a global chip shortage that has led countries to try to become more independent in semiconductor production. The vast majority of chips today are made in Asia, with Taiwanese TSMC, South Korean Samsung, and Chinese SMIC among the world’s largest chip producers.

Tom Tugendhat, head of the UK government’s China Research Group and chairman of the Foreign Affairs Select Committee, expressed concern about a possible takeover of NWF in a letter to UK Business Secretary Kwasi Kwarteng in June.

“I have to stress again that the fact that the UK’s main 200mm silicon and semiconductor technology development and processing facility is taken over by a Chinese entity – in my opinion – is of economic concern and important national security, ”Tugendhat said.

He urged the UK government to revisit the deal under the National Security and Investment Act, which was introduced in April as part of an effort to protect the country’s tech companies from seizures. overseas control where there is an economic risk or a security threat.

“This is the biggest advanced semiconductor factory in England sold to the Chinese and the British government is not doing anything about it,” a source said, adding that they should at least try to get $ 1 billion. dollars for that. .

A UK government spokesperson told CNBC: “We are aware of Nexperia’s expected takeover of Newport Wafer Fab. While we do not see fit to intervene at this time, we will continue to monitor the situation of Newport Wafer Fab. closely and will not hesitate to use our powers under the Business Act if the situation changes.

They added: “We remain committed to the semiconductor industry and the vital role it plays in the UK economy.

NWF’s £ 63million price tag is way lower than Texas Instruments’ $ 900million announced that he will pay for a vacant Micron plant in Utah this week.

NWF has several unpaid debts, including £ 20million with HSBC and £ 18million with the Welsh government, one of the sources said, adding that these will be repaid after the sale.

The deal comes after Cambridge chip designer Arm, often considered the crown jewel of Britain’s tech industry, agreed to be bought out by US chip giant Nvidia for $ 40 billion. The takeover, however, is under scrutiny by regulators around the world after rival Qualcomm and others objected.

With tensions rising between China and the West, other countries are investigating Chinese technology buyouts before they are approved.

Earlier this month, South Korea launched a review after Beijing-based Wise Road Capital struck a deal to buy semiconductor company MagnaChip, saying it is a ” national core technology “. The US Treasury Department has also asked parties involved in the transaction to file opinions with the Committee on Foreign Investment in the United States.

In March, the Italian government blocked Chinese firm Shenzhen Investment Holdings from acquiring a majority stake in Milan-based semiconductor company LPE, hailing it as a “strategically important” sector.