Chinese bid for tech plant blocked over security fears
Grant Shapps uses law to order Nexperia to divest its holding in chip-maker Newport Wafer Fab
A CHINESE-BACKED company was last night ordered to sell its controlling stake in a Welsh microchip factory over national security concerns.
Dutch-headquarted Nexperia, which is controlled by China’s Wingtech, a part state-owned business, immediately vowed to appeal against Business Secretary Grant Shapps’s order to divest more than three quarters of its holding in Newport Wafer Fab.
The move, under the National Security and Investment Act, comes after years of increasingly icy Western relations with China, amid moves to block Chinese state-backed enterprises such as Huawei from sensitive UK market sectors.
A government spokesman said: “Following a detailed national security assessment, the Business Secretary has decided to issue a Final Order requiring Nexperia to sell at least 86pc of Newport Wafer Fab to [mitigate] against potential national security risks.”
The microchip factory, located in South Wales, specialises in making computer chips used by automotive and consumer industries.
Reacting to the announcement, Nexperia’s UK boss Toni Versluijs said he was “shocked” and added: “The decision is wrong, and we will appeal to overturn this divestment order to protect the over 500 jobs at Newport. This decision sends a clear signal that the UK is closed for business.” The company has always emphasised its Dutch base of operations and said it does not act as an extension of the Chinese state.
The takeover was called in under the National Security and Investment Act by former business secretary Kwasi Kwarteng in May, with detailed scrutiny of the buyout seemingly pushed to the back burner amid the political turmoil caused by Boris Johnson’s downfall and the brief rise and fall of Liz Truss’s government, in which Mr Kwarteng served as chancellor.
Nexperia bought Newport Wafer Fab last year for £63m after the Welsh factory fell into financial difficulties during the Covid-19 pandemic. Addressing concerns at the time about its parent company’s links to China, Nexperia said buying Newport would safeguard 500 jobs at the site with a flow of fresh orders for the plant. It also pledged to invest £160m into the plant, although critics said a potential private equity investment in the factory was blocked in 2020.
Yet Nexperia’s business plans for Newport included ramping up production for its own chip designs, shutting out other customers who had previously used Newport’s expertise as a contract manufacturer to produce their own chips.
One such company was Rockley Photonics, which offshored its UK chip production after Nexperia’s acquisition of the Welsh plant.
Chief executive Andrew Rickman told MPS earlier this year: “The current owner [of Newport], for business reasons which are known to themselves, don’t want us to manufacture there… we’re now a scaling manufacturer. But elsewhere in the world.”
Potential investors in Newport include Ron Black, the former Imagination Technologies chief executive. Earlier this year Mr Black was poised to launch a bid to acquire a stake in Newport with a rumoured £300m fund.
Similarly, investment fund Headlight Technology Partners’ co-founder told The Telegraph in August that it would support Mr Black’s bid. Two previous national security reviews into Newport, the second ordered bymr Johnson after the Nexperia deal was completed, said there were insufficient grounds to block the takeover.
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