LONDON — The U.K. has instructed Chinese-owned technology company Nexperia to sell at least 86 percent of the Newport Wafer Fab factory it acquired last year, citing national security grounds.
It follows a long-running government review under the U.K.’s National Security and Investment Act 2021, which probed the acquisition of the factory by Dutch company Nexperia, now a subsidiary of Wingtech Technology, a Chinese producer of telecoms equipment.
The Department for Business, Energy and Industrial Strategy (BEIS) announced Wednesday night that it believed Nexperia’s control of the plant in the Welsh city of Newport risked the leak of technology and know-how to China from compound semiconductor production at the factory, and that such activities could undermine the U.K.’s own capabilities.
“We welcome foreign trade and investment that supports growth and jobs,” Business Secretary Gran Shapps tweeted. “But where we identified a risk to national security we will act decisively.”
The review, initiated in May, looked at the July 2021 acquisition retrospectively after ministers flagged security concerns over Shanghai-listed Wingtech’s ties with the Chinese state, and amid a global chips shortage.
Newport Wafer Fab is the U.K.’s largest manufacturer of silicon wafers, a tiny component that is exported to Asia and incorporated into chips or semiconductors. These are later used in a range of electronic devices, from phones and household appliances to cars.
Nexperia is already planning to appeal the decision. It dismissed the national security concerns and pointed out that two previous security reviews had found no such risk. “We are genuinely shocked,” Nexperia U.K.’s general manager Toni Versluijs said in a statement.
“The decision is wrong, and we will appeal to overturn this divestment order to protect the over 500 jobs at Newport,” he added.
But Alicia Kearns, chair of the House of Commons foreign affairs committee, welcomed the order, with the Conservative MP arguing that the U.K. must ensure its strategic assets do not fall “into the hands of authoritarian powers for the sake of short-term advancement.”
“I’m sure many will be relieved that we aren’t handing over critical security infrastructure to a company with well-documented links to the Chinese state,” she said. “This decision should mark the beginning of delivering on policies that strengthen British national security and protect our leading tech companies and research from falling into the hands of our competitors.”
Nexperia has denied being under the control of China. Two of the 13 members of its executive management team, including its chief executive, are Chinese, with the rest holding U.S., Canadian or European passports.
In September, and amid speculation that the government planned to ask Nexperia to slash its ownership of the firm substantially, it emerged that Newport Wafer Fab’s previous owner, Drew Nelson, had teamed up with private equity group Palladian Investment Partners to try to buy the semiconductor plant back. Nexperia has fought back against that prospect.