Grant Shapps blocks sale of microchip firm to Chinese company over security fears

Nexperia says the move puts 500 jobs at risk

(EPA)

Grant Shapps has blocked the sale of a UK microchip manufacturer to a Chinese-owned company, citing a potential risk to national security.

Newport Wafer Fab is one of the UK’s largest manufacturers of semiconductors and there was concern over its reported £63m purchase by Nexperia, a company said to be linked to the Chinese Communist Party.

Nexperia bought a further 86 per cent of shares in Newport Wafer Fab in July 2021, taking its total shareholding to 100 per cent.

A UK government spokesperson said: “Following a detailed national security assessment, the business secretary has decided to issue a final order requiring Nexperia to sell at least 86 per cent of Newport Wafer Fab to prevent against potential national security risks.”

In the final notice order, laying out his reasoning for the move, the business secretary said that he considered the risk related to “technology and know-how that could result from a potential reintroduction of compound semiconductor activities at the Newport site, and the potential for those activities to undermine UK capabilities”.

He noted “the location of the site could facilitate access to technological expertise and know-how in the South Wales Cluster (“the Cluster”), and the links between the site and the Cluster may prevent the Cluster being engaged in future projects relevant to national security”.

Nexperia is a subsidiary of the partially state-owned Chinese company Wingtech Technology, whose headquarters are located in Nijmegen, the Netherlands.

The semiconductor manufacturer responded to Mr Shapps’ action with frustration, saying it will challenge the government in a bid to keep its UK factory and jobs.

“The far-reaching remedies which Nexperia offered to fully address the government’s concerns have been entirely ignored,” it said in a statement. “The UK government chose not to enter into a meaningful dialogue with Nexperia or even visit the Newport site.

“More than 500 employees in Newport also raised their own significant concerns about such a divestment – the government has chosen not to listen to them and instead taken this decision which puts the livelihoods of them and their families, as well as more than £100m of taxpayers’ money, completely unnecessarily at risk.”

In a statement, the China Research Group of Conservative MPs said: “Our long-term security relies on the resilience of our economy and that means ensuring we don’t allow strategic assets to 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.

“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.”

In April, Nexperia’s potential purchase of Newport Wafer Fab was cleared to go ahead after a review found no reason for ministers to intervene on national security grounds.

The review, by national security adviser Stephen Lovegrove, was ordered by Boris Johnson last year after concerns were raised over the sale of the Welsh semiconductor manufacturer, whose chips are an essential component of electronic devices.

It comes just one day after prime minister Rishi Sunak said at the G20 summit in Indonesia that China was “undoubtedly the biggest state-based threat to our economic security”, but that in national security terms it was a “systemic challenge” rather than a “threat”.