Analyst Penn casts blame on Nexperia as Newport takeover investigated
Malcolm Penn, semiconductor industry analyst and former director of Newport Wafer Fab Ltd., has said that Chinese-owned Nexperia pushed the chip maker to the brink of bankruptcy before mounting a hostile takeover.
Penn, who was a non-executive director of Newport Wafer Fab up until the takeover in July 2021, is reported in the Sunday Times saying that Nexperia refused access to a contracturally agreed working capital loan and then withheld approval of a multi-million-pound injection of capital by a UK private equity fund. This pushed Newport Wafer Fab to the edge of bankruptcy and in turn allowed Nexperia to mount a hostile takeover bid, Penn has alleged.
Penn’s comments come as the takeover of NWF is being investigated by the UK government’s ministry of Business, Energy and Industrial Strategy (see Newport Wafer Fab sale comes under investigation).
The investigation is being made under the National Security and Investment Act 2021 but comes more than a year after the possibility of the takeover was raised.
No action then
Before the deal was made the board of directors of NWF wrote to Business Secretary Kwasi Karteng seeking protection from the takeover, but the UK government declined to act. Nexperia NV (Nijmegen, The Netherlands) is a maker of predominantly silicon power devices but is owned by Wingtech a Chinese chip company based in Shanghai.
The UK’s inaction at the time was despite the fact that Newport Wafer Fab (NWF) was the focus of a cluster of excellence in compound semiconductors and taxpayers’ money had been spent on developing process technologies such as gallium-nitride-on-silicon (see UK government helps NWF develop GaN foundry process).
Nexperia was a customer of silicon foundry services offered by Newport Wafer Fab and became its second largest shareholder in 2019. When NWF failed to meet certain conditions of its supply contract Nexperia exercised a right within its contract to appoint board directors. They in turn were able to vote through the takeover of the company.
Penn has said that Nexperia, rather than bailing out a failing operation, contrived to acquire a company that could otherwise have continued in the UK’s national interest.
Compound semiconductor foundry
Penn has also taken exception to some comments made by Toni Versluijs, Nexperia’s UK manager, to a House of Commons committee (see Newport chip foundry is still possible, Nexperia’s Versluijs tells MPs). As part of his answers to MPs Versluijs said: “There was the illusion there was a compound semiconductor open-access fab. Such a fab did not exist and does not exist.”
The Daily Telegraph quotes Penn from a letter written to MPs: “I know from personal experience as a non-executive director… that the site was specifically developed and set up to offer open access chip processing services both to the compound semiconductor industry as well as its silicon customers.”
Versluijs did say that Nexperia has offered to host a compound semiconductor foundry within its newly acquired Newport facility but the offer has not been taken up in the year since the takeover.
Penn’s comments raise the heat around Nexperia’s takeover of Newport Wafer Fab. The investigation is expected to come to a conclusion at some point before mid-September.
It remains unclear whether it would be practical to undo the deal.
Meanwhile IQE plc has thrown its hat in the ring saying it would like to host a compound semiconductor foundry at is facility also in Newport (see IQE has vision for billion-pound foundry in Newport).
Related links and articles:
Newport Wafer Fab sale comes under investigation
Newport chip foundry is still possible, Nexperia’s Versluijs tells MPs
IQE has vision for billion-pound foundry in Newport
UK government opens inquiry about domestic semiconductor industry
Newport Wafer Fab seeks funds for capacity expansion
Opinion: Is the West still blind to China’s ‘buy-the-tech’ strategy?