Newport Wafer Fab – the UK’s largest chip factory was bought out

In the midst of “thirst”, the UK’s largest chip factory must “sell itself”

Newport Wafer Fab, the UK’s largest chipmaker, will sell itself to China’s Nexperia Semiconductor for around £63 million ($87 million) next week.

The global thirst for chips has forced automakers to remove some high-end features from their vehicles. Photo: AFP

Two unnamed sources on CNBC have just revealed the deal. Nexperia is a Dutch company but is 100% owned by China’s Wingtech Technology Semiconductor. The representative of Nexperia on July 2 confirmed that the above agreement negotiations are being carried out.

Newport Wafer Fab chip factory closes foot in Newport, South Wales, privately held since 1982. It is one of the few semiconductor fabrication plants in the UK.

Sources say Nexperia will announce the takeover as early as next week, on July 5 or a day later.

Meanwhile, a Nexperia spokesperson said: “We are having constructive conversations with Newport Wafer Fab and the Welsh government regarding the future of Newport Wafer Fab.” “Until we reach a conclusion, we cannot comment further,” he added.

Information about the agreement attracted attention because it appeared in the context of the world being heavily affected by the global “thirst” for chips. This thirst is simultaneously triggering a race among countries to become more independent in semiconductor production. Most of the current chip supply is produced in Asia, coming from the world’s three largest chip manufacturers, including: Taiwan’s TSMC, South Korea’s Samsung, and China’s SMIC.

In a letter to UK Economy Minister Kwasi Kwarteng in June, Tom Tugendhat, head of the UK government’s China Research Group and chairman of the UK’s Foreign Affairs Committee The British House of Commons, expressed concern about the acquisition of Newport Wafer Fab.

“I must stress again that the Newport Wafer Fab – the UK’s leading silicon and semiconductor technology development and fabrication plant – has been taken over by a Chinese entity; in my view, it is is a significant national security and economic concern,” Tugendhat said.

Mr Tugendhat called on the UK government to review the purchase under the Investment and National Security Act, which was enacted in April 2021 as part of an effort to protect the country’s tech companies. this before an outside takeover.

“This is the last remaining largest state-of-the-art semiconductor plant in the UK being sold to China and the UK government will not take action on it,” a source familiar with CNBC commented, adding that they should at least review and maybe even make 1 billion dollars.

“We are aware of the Nexperia takeover of Newport Wafer Fab. We do not think now is the right time to intervene, but we will continue to monitor the situation closely and will not hesitate to exercise our rights. term under the Enterprise Act should the situation change,” a UK government spokesman said.

“We remain committed to developing the semiconductor sector and maintaining its vital role in the economy,” he added.

Newport Wafer Fab’s £63 million ($87 million) price tag is much lower than the $900 million Texas Instruments bid for the vacant branch of the computer memory and data storage maker. Micron Technology (USA) computer data in Wyoming this week.

In fact, Newport Wafer Fab has a number of outstanding debts, including £20m with HSBC and £18m with the Welsh government. The unnamed source added that these debts will be completely paid off after the sale.

Particularly, CEO Drew Nelson – a major shareholder of Newport Wafer Fab after he bought the business from Infineon of Germany four years ago – will pocket about £ 15 million if the final sale goes through.

Newport Wafer Fab specializes in the production of silicon chips used in power supply applications for automotive manufacturing, an industry that has been hit hard by global chip shortages. The company is working on developing a more advanced, fast and energy efficient “mixed semiconductor” product.

Under the agreement, CEO Nelson is still allowed to deploy the Newport Wafer Fab’s mixed semiconductor manufacturing business. Mr. Nelson also plans to reinvest the proceeds from the sale into the new venture. In addition, this major shareholder will also be allowed to retain the Newport Wafer Fab brand.

Before the Newport Wafer Fab, Arm – the “jewel” of the British technology industry – agreed to sell itself to the US chip giant Nvidia for $ 40 billion. However, this acquisition is being investigated by regulators in many countries around the world after Qualcomm and other rivals in the semiconductor industry voiced objections.

As tensions between China and democracies around the world increase, many countries are investigating Chinese technology takeover deals before the deal is approved.

Earlier this month, South Korea began conducting a review after Beijing-based Wise Road Capital approved an agreement to buy semiconductor company MagnaChip, which the Korean side described as “national core technology.” family”. The US Treasury Department requires parties involved in this deal to notify the US Foreign Investment Commission.

Three months ago, the Italian government blocked Shenzhen Investment Holdings (China) from acquiring a controlling stake in LPE, a semiconductor company based in Milan.