Government quietly allows Chinese takeover of UK microchip plant

Ministers have quietly allowed a Chinese-owned company to take over a semiconductor plant in Wales, it was revealed on Friday, after a security review.

According to Politico, the government decided not to intervene in the sale of the Newport Wafer Fab by Wingtech after its national security advisor Stephen Lovegrove spent six months looking into the deal.

The facility, which is the UK’s largest semiconductor plant, was taken over by the Dutch-based Nexperia last year - itself a subsidiary of Wingtech.

Last July, China economic intelligence specialist Datenna said Wingtech had close ties to the Chinese Communist Party, with almost a third of its shares traced back to the government in Beijing.

Nexperia already has a presence in the UK, manufacturing ‘MOS-FET’ transistors at its wafer fab in Stockport, Greater Manchester.

Politico said Lovegrove had decided there were not enough security concerns to intervene in the sale of Newport, citing two unnamed government officials.

Both security experts and Tory MPs hit back at the decision, however, with the House of Commons foreign affairs committee chairman Tom Tugendhat saying it wasn’t clear why the government didn’t “fully review” the takeover.

“This is an area where China is sinking billions to compete,” he told Politico.

“The government has no clear strategy to protect what’s left of our semiconductor industry.”

Prior to the sale, the Newport fab was operated by the privately-held Newport Wafer Fab Ltd, having been sold by German semiconductor giant Infineon in 2017.

Infineon took ownership of the facility in 2015 when it acquired the US-based International Rectifier, which itself bought Newport from independent interests in 2003.

In August last year, it emerged that nine unnamed UK companies were willing to jointly acquire the facility as backlash to the sale to China grew.

Ron Black, former chief executive of Imagination Technologies, said at the time that three more firms had joined the original six in a consortium bidding for the fab.

Data Center Dynamics reported in August that Newport had more than a dozen research contracts - including defence projects - with the UK government.

Adding fuel to the controversy, CNBC said around the same time that US-based Ideal Semiconductor saw its business with Newport come to a sudden stop after the takeover.

Ideal’s CEO Mark Granahan told the news network that the processing it was having completed at Newport came “to a screeching halt” after the acquisition, with the company scrambling to find alternatives.