Nexperia argues forced sale would close Newport fab
Chinese-owned Nexperia NV, (Nijmegen, The Netherlands) reckons its Newport subsidiary – formerly Newport Wafer Fab Ltd. – would go bust if the UK government’s ruling to reverse its acquisition is complied with.
In November 2022 the UK government told Nexperia it must reduce its ownership of the Welsh wafer fab to less than 14 percent on the grounds of national security. Early in 2023 Nexperia said it would seek a judicial review with the High Court (see Nexperia lawyers up for fight over Newport Wafer Fab).
Nexperia argues that a reconstituted and independent Newport Wafer Fab would have only one customer and would lose £170 million over the next 21 months, forcing it into bankruptcy, according to a Telegraph report that references filings to the High Court. The filings go on to say that a staff exodus would cripple Newport’s manufacturing capacity and threaten its viability as a feasible business.
“For both prospective customers, as well as potential alternative owners of the Newport facility, such a turn of events would decimate Newport’s value proposition even in the event that a viable alternate buyer and customers could be found,” the report quoted the filings as saying.
Who will buy?
Newport Wafer Fab Ltd. was the UK’s largest semiconductor wafer fab being used as the focus for a compound semiconductor research cluster in South Wales. It tried to gain revenue by acting as a foundry, but got into financial difficulties before being acquired by Nexperia in July 2021.
Nexperia is owned by Chinese company Wingtech, and this fact raised concerns over semiconductor security at the national and international level. There were also allegations that Nexperia had made use of clauses in a supply agreements allowing it to appoint directors, which it then used to launch a takeover bid. Many opposed the deal with the company’s board of directors even writing to the then UK Business Secretary – Kwasi Karteng – seeking protection from the takeover. The government declined to act until November 2022, more than one year after the takeover.
By this time Nexperia had purposed the wafer fab the production of its silicon power devices and proved itself a popular owner, receiving support from the workforce (see Let us stay under China control, Newport workers plead). The employees’ association argued that a forced sale without a credible business plan would jeopardise jobs.
Nexperia had also offered to set clean room space aside to let a third-party operate a research and foundry within the Newport campus.
Related links and articles:
Nexperia lawyers up for fight over Newport Wafer Fab
Chinese takeover of Flusso was quietly cleared last year
Let us stay under China control Newport workers plead
Newport Wafer Fab sale decision delayed, as private equity circles
Technology fund formed for Newport Wafer Fab rescue bid