Based in South Wales, the Newport Wafer Fab produces around 8,000 wafers a week. The 200mm wafers are primarily used by the auto industry, which is suffering from the brunt of the current global semiconductor shortage. Credit: Insider Media.

There’s no question that the global semiconductor industry has risen in geopolitical prominence. Both the US and China, and several other nations, have targeted it as a key technology for their future competing economies.

Which is why Nexperia, a Dutch-based firm wholly owned by China’s Wingtech, is running into interference on its recent takeover of Newport Wafer Fab, the UK’s largest producer of semiconductors, The Guardian reported.

The takeover, which has set off alarm bells in the British government and sparked criticism, has forced UK Prime Minister Boris Johnson to ask his national security adviser to review the purchase.

This came only a day after the Welsh secretary said he was “satisfied” that security risks had been taken into account, in answer to criticism from Labour and Conservative MPs.

Labour said on Tuesday the government should “use its powers under the National Security and Investment Act to urgently scrutinize this takeover.”

The semiconductor industry already makes about a trillion chips a year, but that number is expected to rise as computers are added to more and more devices, the report said.

Global shortages of computer chips have this year caused big delays for carmakers around the world, deeply cutting into profits.

The government is also scrutinizing the takeover of Cambridge-headquartered chip designer Arm by the US chip company Nvidia on national security grounds.

That investigation, announced in April, also followed pressure to intervene, the report said.

Speaking to MPs on parliament’s liaison committee, Johnson said: “I think semiconductors are of huge importance to this country, and one of the things I wanted to look at immediately when I became prime minister was whether or not we could become more self-reliant.

“We have to judge that the stuff that they are making is of real intellectual property value and interest to China, whether there are real security implications.”

On Tuesday, Ed Miliband, the shadow business secretary, said: “Given the importance of semiconductors to our country’s critical infrastructure, there is a clear case to examine this on national security grounds.”

Newport Wafer Fab is an electronics firm which produces semiconductors and employs 450 people at its site in Tredegar Park, the report said.

Drew Nelson, Newport Wafer Fab’s outgoing chairman, said the deal was a “key part” of the industry in south Wales.

Although Nexperia has not revealed the sum paid or how the deal was constructed, it was for US$87m (£63m), according to reports.

This follows a US$700m investment by Nexperia in its fabs in Manchester, UK and Hamburg, Germany, to boost capacity. 

Newport Wafer Fab is capable of making power and compound semiconductor ICs on 200mm-diameter wafers and has a capacity of 35,000 wafers a month, the report said.

The fab was built for Inmos in 1982 to build the transputer and has since been owned by STMicroelectronics, International Rectifier and Infineon before becoming NWF in 2017. 

Tom Tugendhat, leader of the UK government’s China Research Group and chairman of the Foreign Affairs Select Committee, said he was concerned about a potential takeover of NWF in a letter to Business Minister Kwasi Kwarteng in June.

“I must stress again that having the UK’s leading 200mm silicon and semiconductor technology development and processing facility being taken over by a Chinese entity — in my view — represents a significant economic and national security concern,” Tugendhat said.

He had urged the UK government to review the deal under the National Security and Investment Act, which was introduced in April as part of an effort to protect the nation’s technology companies from overseas takeovers when there’s an economic risk or a security threat.

“This is the largest last remaining advanced semiconductor factory in England being sold to the Chinese and the British government aren’t doing s*** about it,” a source said, adding that they should at least try and get $1 billion for it.

Sources: The Guardian, BBC News, EENewsEurope, CNBC