Company ‘Shocked’ After UK Blocks Chinese Purchase of Chip Facility

The U.K. this week ordered a subsidiary of China’s Wingtech Technology to divest from Britain's largest microchip facility, Nexperia Newport (formerly Newport Wafer Lab), several months after U.S. lawmakers urged the Biden administration to intervene in the acquisition. The U.K.’s Department for Business, Energy & Industrial Strategy’s decision will force Wingtech’s subsidiary, Netherlands-based Nexperia, to sell at least 86% of its stake in Nexperia Newport “within a specified period and by following a specified process.” Nexperia acquired the stake in then Newport Wafer Lab in 2021.

The U.K. said the deal presented various national security risks, including risks relating 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.” The country also said “the location of the site could facilitate access to technological expertise and know-how in the South Wales Cluster” and the “links between the site and the Cluster may prevent the Cluster being engaged in future projects relevant to national security.”

U.S. Republicans in April asked the Biden administration to "employ all tools necessary" to convince the U.K. to block the acquisition, saying the deal could allow China to acquire sensitive semiconductor technologies (see 2204210033). If the U.K. didn't block the deal, the lawmakers urged the administration to remove the U.K. from the Committee on Foreign Investment in the U.S.'s excepted foreign states list (see 2201050039 and 2002270049), and impose strict export controls on shipments to Newport Wafer Lab.

In a Nov. 16 statement, Nexperia said it was “shocked” by the U.K. order, adding that its acquisition of Newport Wafer Lab was “cleared by two previous security reviews.” The company said it “does not accept the national security concerns raised. The far-reaching remedies which Nexperia offered to fully address the Government’s concerns have been entirely ignored.”

Toni Versluijs, Nexperia’s U.K. country manager, said the company will appeal the decision. “This decision sends a clear signal that the UK is closed for business,” Versluijs said in a statement. “The UK is not Levelling Up but Levelling Down communities like South Wales.” Nexperia Newport is based in Wales.

Grant Shapps, the U.K.’s minister for business, energy and industrial strategy, said in a Nov. 16 tweet that “we welcome foreign trade & investment that supports growth and jobs. But where we identify a risk to national security we will act decisively.”

The order was the U.K.’s latest decision under its National Security and Investment Act, which took effect earlier this year and was designed to strengthen the country’s foreign direct investment review procedures (see 2111160043). The U.K. in July used the new law to block Beijing Infinite Vision Technology from buying intellectual property related to vision sensing technology from the University of Manchester (see 2207290065).