Kwarteng to intervene in Chinese bid for chip giant

Business Secretary orders national security inquiry into takeover of Newport-based company

KWASI KWARTENG has ordered a detailed security review into the Chinese-backed takeover of Britain’s biggest microchip plant in the clearest sign yet that the deal will be blocked.

The Business Secretary has called in the sale of Newport Wafer Fab to Nexperia under new legislation that gives him the power to intervene on national security grounds.

Mr Kwarteng has overruled the advice of two security investigations to order the review amid growing pressure from Tory backbenchers concerned the deal risks threatening Britain’s interests.

Nexperia’s parent company is Wingtech, a Shanghai-based tech company partly owned by the state.

The deal was completed last summer and Mr Kwarteng had a deadline of early July to call it in before his power to block it lapsed.

He said: “Today, I called in the acquisition of Newport Wafer Fab by Nexperia, a subsidiary of a Chinese company.

“There will now be a full assessment under the new National Security and Investment Act. We welcome overseas investment, but it must not threaten Britain’s national security.”

Tom Tugendhat, the chairman of the foreign affairs committee, which has campaigned for the deal to be blocked, said: “We need to maintain a base to build on to ensure the UK is resilient. This isn’t just about security today but independence tomorrow.”

Under the review, a government screening unit has 30 working days to investigate the national security implications of the deal, which can be extended by 45 days. Mr Kwarteng then decides whether to block the takeover.

Newport Wafer Fab is Britain’s biggest chip plant by volume, producing components for power electronics vital in areas such as electric cars. It is also seen as a key part of a cluster of companies investing in high-tech compound semiconductors in the area.

The company was bought by Nexperia last year after it fell into financial distress. Nexperia has insisted it is a Dutch company and not influenced by the Chinese state. It says it has invested £80m in the factory and recruited staff.

Two security reviews into the deal, most recently by the national security adviser Sir Stephen Lovegrove, have not raised major concerns, and Boris Johnson has said he does not want to block all Chinese investment in Britain.

However, the deal has been opposed in the US, where members of Congress have written to Joe Biden. Tony Abbott, the former Australian prime minister and a trade adviser to Mr Johnson, said he expected the deal to be blocked.

It came as MPS launched an investigation into Britain’s chipmaking capabilities as concerns rise over access to supplies of the vital components and their use in weaponry. The use of semiconductors in arms means the UK should consider access to them as “a matter of national security,” according to Parliament’s business, energy and industrial strategy committee.

The committee’s chair, Darren Jones, said: “Semiconductors are growing in technological and geopolitical importance. With scarce global supply, it’s essential that we conduct a stock take of the UK’S capacity and what government can do to raise it.”

If the deal is blocked, the plant is likely to need alternative private investment. Ron Black, the ex-chief executive of British chip company Imagination Technologies, has said he could lead a consortium investing in the facility.

Nexperia did not respond to requests for comment.