UK asks China’s Nexperia to sell stake in microchip factory, citing security

The British government has ordered Chinese-owned technology company Nexperia to sell at least 86 percent of Britain’s biggest microchip factory, Newport Wafer Fab, following a national security assessment.
The government announced the review of Nexperia’s 2021 purchase of Newport Wafer Fab, known as Nexperia Newport, earlier this year after legislation came into force in January, Reuters news report on Thursday.

The National Security and Investment Act 2021 can be applied retrospectively to deals completed since November 2020. The act allows the government to scrutinize and potentially block acquisitions and investments in sensitive sectors.

“We welcome foreign trade and investment that supports growth and jobs. But where we identify a risk to national security we will act decisively,” Business Minister Grant Shapps said on Twitter.

The government said there was a national security risk related to the technology and know-how which could result from compound semiconductor activities at the site, and the potential for those activities to undermine British capabilities.

The location of the site could facilitate access to technological expertise in the South Wales area and prevent that area being engaged in future projects relevant to national security, the order said.

Nexperia, which is headquartered in the Netherlands, said it did not accept the national security concerns raised and that two previous security reviews had found no national security concerns that would give reason to block the acquisition.

“We are genuinely shocked. The decision is wrong, and we will appeal to overturn this divestment order,” Nexperia’s UK country manager, Toni Versluijs, said in a statement.

The government said Nexperia took its shareholding in Newport Wafer fab to 100 percent in July 2021 when it gained an additional 86 percent of the company’s share capital.

“The Secretary of State considers that the final order is necessary and proportionate to mitigate the risk to national security,” the order said.