Race to purchase UK chip fab heats up

12 August 2021

A consortium of semiconductor businesses has entered the fray to purchase the Wales-based Newport Wafer Fab, the U.K.’s largest chip producer, in a bid to snatch it away from Chinese-owned Nexperia.

Nexperia, which is owned by Shanghai-based Wingtech Technologies, announced it was acquiring the wafer fab in July for about $87.4 million, but the U.K. government is reviewing the deal on national security grounds, leaving the possibility open for another buyer to acquire the facility.

If the deal with Wingtech is blocked, the consortium could step in and take it over, according to a report from CNBC. The consortium also told CNBC it would be willing to invest roughly $416 million into the chip fab.

The move by the U.K. government to review the deal comes at a point where the global chip shortage is crippling many parts of the supply chain and capacity and semiconductor demand is higher than ever before. Countries are actively seeking to expand their domestic chip making prowess in the face of the supply chain issues caused by the COVID-19 pandemic and reduce dependency on foreign semiconductor manufacturers in the event of geopolitical issues developing or future pandemics.

The race to secure capacity is causing vendors globally to invest and develop semiconductor manufacturing on their own to avoid these future issues. Fabs are being bought and built, and factories are being expanded not just to meet demand today but also to meet future semiconductor demand that is forecast to grow 5% over the next decade.

Countries that currently hold the majority of semiconductor manufacturing today — specifically Taiwan, Korea and China — are seeking to remain in a leadership position by buying existing fabs, expanding their own facilities and building new ones.

The U.K. government said it was reviewing the purchasing deal given the concern over growing geopolitical issues in the semiconductor industry. An official decision on the deal is expected to happen in the next few weeks.

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