UK government buys Durham fab in shock move
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The UK government has purchased a compound semiconductor fab in Newton Aycliffe to be renamed Octric Semiconductors UK.
The deal to buy the Coherent fab in Newton Aycliffe from Coherent, reported to be £27m ($30m), is a stunning reversal of current semiconductor strategy.
The 310,000 square feet plant, located in Aycliffe Business Park, was acquired by II‑VI (now Coherent) in 2017 and was at risk in a global review by the company.
The deal is to secure the supply chain for compound semiconductors used for military applications. The fab, still operating as II-VI Compound Semiconductor, will be renamed Octric Semiconductors UK with much the same management. Work has already started to implement the governance that will ensure appropriate financial oversight, which will be a new factor for the government.
The UK Defence Secretary John Healey visited the site today, which the UK government is the only secure facility in the UK with the skills and capability to manufacture gallium arsenide (GaN) compound semiconductors. The security of GaN production was a key factor in Chinese-owned Nexperia being forced to sell off the Newport Wafer Fab (NWF) in Wales to US company Vishay as a more secure option.
The acquisition is also intended to boost UK defence industrial capacity and exports, as the government intends to invest in the company over the coming years.
“This acquisition is a clear signal that our government will back British defence production. We’ll protect and grow our UK Defence supply chain, supporting North East jobs, safeguarding crucial tech for our Armed Forces and boosting our national security,” said Defence Secretary John Healey said:
“This strategic investment will ensure the facility is capable of producing gallium arsenide semiconductors as well as more powerful semiconductors in the future, which will include the latest technology.”
“Divesting the Newton Aycliffe plant is part of our effort to optimize our portfolio and streamline our operations, which allows us to focus our investment and capital on the areas of greatest long-term growth and profitability for the company,” said Jim Anderson, CEO.
The announcement comes ahead of the Investment Summit next month as the UK government wants to reset relations with trading partners around the globe and creates a pro-business environment that supports innovation and high-quality jobs.
Macquarie Semiconductor and Technology, a unit within Macquarie Group’s Commodities and Global Markets division, served as transaction consultant to Coherent.
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