Fate Of Newport Wafer Fab Uncertain, As Government Delays Sale Decision

The fate of Newport Wafer Fab will remain uncertain for a bit longer, after the British government delayed a decision about its sale.

In July 2021 it was revealed that Newport Wafer Fab (NWF), the UK’s largest largest chip producer, would be acquired by Dutch chip firm Nexperia for just £63 million ($87 million).

However concern about that move immediately surfaced, centred over the fact that Nexperia is owned by a Chinese chip firm Wingtech Technology.

Chinese buyout

Newport Wafer Fab is based in Newport, Wales, and it is a high volume 200mm wafer fab that makes silicon chips used in power supply applications for the car industry.

The fab has also been developing more advanced “compound semiconductors,” which are faster and more energy efficient.

NWF also makes the wafers that electronic circuits are printed onto.

Some of its work is also potentially sensitive as Newport Wafer Fab has over a dozen UK government research contracts.

Indeed, at least one of contracts involves developing chip technology for a radar system that would be used in fighter jets.

As soon as the Nexperia acquisition was announced last year, national security concerns were immediately raised by Tom Tugendhat MP, leader of the UK government’s China Research Group and chairman of the Foreign Affairs Select Committee.

Tugendhat at the time voiced his concerns that the UK was selling a prized asset to a Chinese-owned company, when there is a global chip shortage.

Just a couple of days after that concern was voiced, Prime Minister Boris Johnson ordered a review of the acquisition of Newport Wafer Fab.

Then in May this year, the government’s promised full national security review of the purchase finally began.

Decision delayed

But now the Financial Times has reported that new national security legislation (i.e. the National Security and Investment Act) was used to allow more time to scrutinise the Newport Wafer Fab purchase.

The decision is reportedly delayed for another month and a half (i.e. 45 days).

The business secretary, Kwasi Kwarteng, had been expected to make a decision on Tuesday on the purchase of Newport Wafer Fab by Nexperia.

But with the turmoil currently engulfing the British government, with Prime Minister Boris Johnson expected to resign today, perhaps a delayed decision seems a reasonable move.

Using the National Security and Investment Act, Kwasi Kwarteng has the option to either block the deal, demand remedies, or allow it to go ahead.