The Chinese language firm Nexperia confirms the acquisition of Nice Britain’s largest chip manufacturing unit

Sefa Ozel | E + | Getty Images

LONDON – Nexperia, a Dutch chip company owned by China’s Wingtech, confirmed Monday that it plans to acquire the UK’s largest chip maker, Newport Wafer Fab.

It comes after two people close to the deal told CNBC on Friday that the acquisition would be officially announced earlier this week.

Nexperia, which became NWF’s second largest shareholder in 2019, said the acquisition will help it make more chips and meet growing demand.

Achim Kempe, Nexperia’s Chief Operations Officer, said in a statement: “The Newport site has a very knowledgeable operations team and plays a vital role in ensuring the continuity of operations. We look forward to building a future together. “

The financial details of the transaction were not disclosed, but two CNBC sources said it was worth around £ 63 million ($ 87 million).

Concerns have been raised that the UK is selling a valuable asset to a Chinese company while a global chip shortage could last until 2023.

Tom Tugendhat, head of the UK government’s China Research Group and chairman of the Foreign Affairs Select Committee, told CNBC on Monday that he was very surprised that the purchase was not being reviewed under the National Security and Investment Act, which was introduced in April. “After interacting with partners in the US and around the world, I know that I am not alone,” he said.

“The semiconductor industry sector falls within the scope of legislation, the ultimate aim of which is to protect the country’s technology companies from foreign takeovers when there is a significant risk to economic and national security,” he said. “When the UK signed the Carbis Bay G7 communiqué, we committed to taking steps to build economic resilience in critical global supply chains such as semiconductors. This appears to be an immediate and very public reversal of that commitment.”

Tugendhat noted that the government “has yet to explain why we should turn a blind eye when the UK’s largest semiconductor foundry falls into the hands of a company from a country with a track record of using technology to create geopolitical leverage”.

The UK competition agency announced an investigation into Nvidia’s $ 40 billion bid for Cambridge-based Arm, whose chip designs are used by chip makers around the world. The investigation began in January, about four months after the deal was first announced.

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

In March, the Italian government prevented the Chinese company Shenzhen Investment Holdings from acquiring a controlling stake in LPE, a Milan-based semiconductor company, praising it as a sector of “strategic importance”.

The £ 63 million purchase price for NWF is much lower than the $ 900 million Texas Instruments announced last week for a Micron facility in Utah.

“A wafer factory cost of £ 63 million is tiny,” Forrester analyst Glenn O’Donnell told CNBC. “Most wafer fabs cost well over £ 1 billion. Even if they are older technologies, this deal is ridiculously cheap.”

NWF debt

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

Drew Nelson, the CEO who became majority shareholder of NWF after the company was acquired four years ago by German Infineon, will receive around £ 15 million, according to a person familiar with the terms.

NWF manufactures silicon chips that are used in power applications for the automotive industry, which has been particularly hard hit by chip scarcity. The company has also developed more advanced “compound semiconductors” that are faster and more energy efficient.

Under the agreement, Nelson will be allowed to outsource the compound semiconductor business of NWF and will plan to reinvest his proceeds in this new company, according to the person. He is also allowed to keep the Newport Wafer Fab name.

A Welsh government spokesman said: “Today’s announcement will save 400 jobs and make other significant investments in the facility, including new equipment to grow the business. plus interest. “

They added, “Chinese property issues are a matter for the British government.”

A UK government spokesman told CNBC on Friday that it “does not consider it appropriate to intervene at this time” but that it “will continue to monitor the situation closely”.

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