The UK ordered China’s Wingtech Technology Co (聞泰科技) to undo its acquisition of Britain’s biggest microchip factory more than a year after the deal closed, citing national security concerns.
Wingtech’s Dutch subsidiary, Nexperia Holding NV, would be forced to sell the 86 percent of Newport Wafer Fab in Wales it bought in July last year in a deal worth about £63 million (US$75 million).
It held a small shareholding before that date, prior to the new UK takeover rules.
British Secretary of State for Business, Energy and Industrial Strategy Grant Shapps saw a risk to national security from “a potential reintroduction of compound semiconductor activities” at the site, referring to advanced chips used in applications such as electric vehicles, “and the potential for those activities to undermine UK capabilities,” the order published late on Wednesday said.
The site’s importance to the cluster of related business and research in south Wales was also a factor, the statement said.
It is the second Chinese takeover blocked by the UK’s new National Security and Investment Act, which came into force in January, and it is the first retrospective rejection of a deal.
The decision shows increasing hostility to Chinese investment in the kingdom after then-British secretary of state for business Kwasi Kwarteng vetoed a Hong Kong-based firm’s acquisition of an electronic design company in August.
Possible buyers for Newport Wafer Fab might be waiting in the wings, including a consortium led by Ron Black, the former chief executive of British chip design company Imagination Technologies Group Ltd.
In an e-mailed statement, Nexperia said it was “shocked” by the decision, did not accept the national security concerns raised and would appeal to overturn the order.
The company added that the government had not engaged with it or its proposed remedies, such as offering UK officials direct control and participation.
“This decision sends a clear signal that the UK is closed for business,” said the company’s UK manager, Toni Versluijs.
Newport Wafer Fab makes silicon wafers on which microchips are etched. These chips are assembled in Asia and are largely used in simple applications, such as power switches, many of which go into vehicles.
The facility has passed through a series of international owners since it was founded in 1982 and was bought by Nexperia last year from former manager Drew Nelson.
Part of the controversy concerned the firm’s largely unused facility at the site, which was at one point set to become the nucleus for more sophisticated “compound” chips used in technology such as facial recognition, 5G and electric vehicles.
Since the deal, Newport only makes semiconductors for its Chinese owner’s needs.
It has said it would need a viable business plan to prepare the facility to make the compound semiconductors.
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