London blocks Chinese takeover of chip factory

Dhe British Department of Commerce has the takeover of the largest microchip factory on the island was prevented by a Chinese state-affiliated company. The decision followed a four-month government review under the new National Security Law. It is justified with the risk that “technology and know-how” could flow out if the factory were to develop new compound semiconductors. Now the Chinese group Wingtech has to sell the 86 percent stake in Newport Wafer Fab in Wales that it acquired last year.

The Chinese had them chip factory acquired outright through its Dutch subsidiary Nexperia in July 2021. Previously, they were a minority shareholder with 14 percent. Nexperia paid 63 million pounds (about 72 million euros) for the remaining 86 percent. The factory in Wales produces around 200,000 silicon wafers a year for electronic systems that are built into coffee machines or car windscreen wiper controls and employs a good 500 people in Newport.

Nexperia was outraged by the London government’s decision. Country manager Toni Versluijs said: “We are really shocked. The decision is wrong. We will appeal to reverse this divestment order.” Nexperia’s CEO Xuezheng Zhang is also trying to apply pressure behind the scenes. Nexperia operates another factory with 1,000 employees near Manchester.

During and after the corona pandemic, there were global bottlenecks and delivery problems for the microchips, which are a central component of all electronic devices. The chips manufactured in South Wales are based on older technology, but the government nevertheless feared that high-tech know-how could flow out of the Wales cluster. Nexperia is a leading mass producer of chips. The company employs a total of 14,000 people. Wingtech Technology from China, one of the largest chip manufacturers for the smartphones, which for Huawei Technologies and Xiaomi Corp, took control of Nexperia in 2019 and paid more than $5 billion for it. A third of the shares in Wingtech are said to be under the control of the Chinese state.

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