Chinese company Nexperia, a subsidiary of Wingtech Technology was about to take over Newport Wafer Fab (NWF), a UK-based company, the largest microchip manufacturer of the country that produces 32000 wafers per month for 200 nm microchips.
China is planning on becoming self-reliant on the technology that powers all of mankind’s future scientific advances.
The key semiconductor has an advanced logic chip that gives computers and smartphones their intelligence. It is the most advanced and complex piece of silicon that needs very advanced manufacturing for its making.
Taiwan Semiconductor Manufacturing Company (TMSC) imports chips from the United States and has strong ties with the companies producing them. The United States has banned China from using US technologies due to several security concerns including affecting fundamental interests.
China’s rise as a superpower in technology has become a matter of concern for many.
Amid the increase in imports and exports since 2004, China has become extremely important for the UK economy, as it is the second-largest Non-European import partner after America. According to reports, the British government approved the sale of Newport Wafer Fab despite concerns about national security.
As the Newport Wafer Fab owed a debt of £18 Million to the Welsh government and outstanding debt of £20 Million to HSBC, it is said to be paid off after the deal with the Chinese company. But the £63 million transactions became a matter of huge concern for the UK government.
As China is moving forward with acquiring key parts of Britain, controversies rose among the lawmakers and the politicians (MPs) against the takeover of NWF. Tom Tugendhat, a UK parliament member and the chairman of the parliamentary Foreign Affairs Committee, said that they would be very surprised if the takeover was not reviewed by the National Security. But according to Stephen Lovegrove, the deal does not raise a national security risk and there are insufficient reasons to block the deal.
There is a global shortage of semiconductor chips. China accorded the deal the same importance it accorded to the Atomic Bomb Program by buying NWF. Nexperia’s purchase is seen as a concern that Nexperia will make it difficult for other companies to use the manufacturing facilities and there is a risk of reduction in shareholdings.
Prime Minister Boris Johnson announced a national security review of the £63 Million deal under the National Security and Investment Act,2021 by Alfred Kwasi Addo Kwarleng, Secretary for State Business, Energy and Industrial Strategy of the United Kingdom, and tasked Sir Stephen Lovegrove, National Security Advisor with examining the takeover.
Nexperia was previously a shareholder of NWF. It paid 87.9 million dollars. But to agree with the National Security and Investment Act, if it sells 75% of its shares, the deal will workaround at £50 million. The government is looking for a win-win situation. Prime Minister Boris Johnson said he did not want to drive Chinese investment away from Britain because of the “anti-China spirit” when asked whether the sale of a semiconductor producer would go ahead to Chinese-owned Nexperia.
