The global chip shortage will continue and consumers will have to pay for it, said an analyst at International Data Corporation.
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The UK government has blocked a Chinese company’s takeover of the country’s largest microchip factory over fears it could undermine national security.
Grant Shapps, Secretary of State for Business, Energy and Industrial Strategy, on Wednesday ordered Dutch chipmaker Nexperia to sell its majority stake in Newport Wafer Fab, the Welsh semiconductor company it acquired for £63m ($75m).
Nexperia is based in the Netherlands but is owned by Wingtech, a company partially backed by the Chinese government and listed in Shanghai. Nexperia completed the acquisition of Newport Wafer Fab in 2021 and the company subsequently changed its name to Nexperia Newport Limited or NNL.
“The order means that Nexperia BV will be required to sell at least 86% of NNL within a specific timeframe and according to a specific process,” Britain’s Department for Business, Energy and Industrial Strategy said in a statement.
Nexperia originally owned 14% of Newport Wafer Fab, but increased its stake to 100% in July 2021.
“We welcome foreign trade and investments that support growth and jobs,” Shapps said tweeted Wednesday. “But where we see a risk to national security, we will act decisively.”
Toni Versluijs, Nexperia’s UK Country Manager, said the decision was wrong and the company plans to appeal.
“We are really shocked,” Versluijs said in a statement on Wednesday. “The decision is wrong and we will appeal to have this divestiture order overturned to protect the 500+ jobs in Newport.”
Government officials and lawmakers have expressed concern that the UK is selling a valuable asset to a Chinese-owned company at a time of global semiconductor shortages that are ongoing and expected to last into 2024.
Britain launched a national security probe into the Nexperia deal earlier this year, using powers that allow it to scrutinize and block foreign takeovers or investments in sensitive sectors.
The Government said on Wednesday that the location of the facility in Newport, which is part of a strategically important cluster of semiconductor expertise in Wales, ultimately led to the view that the takeover was a national security issue.
While not a particularly large company, Newport Wafer Fab operates the UK’s largest chip manufacturing facility and produces around 32,000 silicon wafers each month.
Nations are increasingly trying to regain control of strategically important industries like semiconductors after widespread supply chain disruptions revealed an over-reliance on China as a global manufacturing hub.
The move could further sore Britain-China relations, which are already at rock bottom after London sought to ban Huawei 5G devices and grant people in Hong Kong special British visas that would eventually lead to citizenship.
The UK has previously investigated NVIDIA‘s acquisition of Arm, a major chip design company, over national security concerns. The acquisition was put on hold by the US semiconductor giant in February.