UK Blocks Acquisition Deal of Newport Wafer Fab to Nexperia Due to National Security Concerns

The government of the United Kingdom made a decision to instruct Wingtech Technology's Dutch subsidiary Nexperia Holding NV to undo its acquisition deal from Newport Wafer Fab, one of the biggest microchip factories in Britain. The decision was made as they cited national security concerns that may occur with this deal.

UK Blocks Acquisition of Nexperia and Newport

After delaying the decision for several months, the United Kingdom government concluded the assessment of the acquisition deal of China-Based Wingtech Technology's Dutch subsidiary Nexperia to Newport Wafer Fab. Based on a report from Bloomberg, an order to revoke the acquisition was requested by the government due to possible risks and concerns regarding national security.

The Department for Business, Energy, and Industrial Strategy stated that if this will be continued, Nexperia will be having full control of the plant located in Welsh City, and may risk the leak of technology to China. This could undermine the country's capabilities. Business Secretary Grant Shapps stated that "We welcome foreign trade and investment that supports growth and jobs. But where we identified a risk to national security we will act decisively."

Because of the decision, Nexperia Holding NV will be needing to take back 86% of the company, which was originally bought in July 2021. This deal costs Nexperia $75 million. As Politico reported, the acquisition was initiated to review by the government in May this year after ministers flagged concerns regarding the relations between Wingtech and the state of China in the middle of the chip shortage globally.

Plans to Appeal

Meanwhile, Nexperia is currently planning to appeal the decision and dismisses the mentioned concerns from the government. The reviews of the government had not found any risk, which is why the company is very shocked by this decision, Nexperia UK General Manager Toni Verslujis stated.

He added, "The decision is wrong, and we will appeal to overturn this divestment order to protect the over 500 jobs at Newport." Following this statement, Verslujis claimed that this decision was a signal that the UK is closed for business.

Delaying Decisions

The decision of the United Kingdom's BEIS department was supposed to announce on October 3rd but requested another 45 days to review the deal. As per a report from South China Morning Post, ministers were given the option to request an extension to the deadlines. However, Nexperia stated that "The only date formally communicated to us by the ISU, the UK's Investment Security Unit, remains October 3rd, But there are circumstances in which they can stop the clock, to look at specific issues more closely. Beyond that, we cannot comment further."

This is the second block by the UK's National Security and Investment to a Chinese takeover. Last August, Business Secretary Kwasi Kwarteng also rejected a Hong Kong-based firm acquisition for an electronic design company. Possible buyers are also expected to acquire Newport Wafer Fab after the rejection, which include Semiconductor Veteran Ron Black's consortium.

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Written by Inno Flores