Semiconductor Equipment

Newport Wafer Fab purchased by Nexperia

07 April 2022

The U.K. government has approved the takeover of the Newport Wafer Fab by Nexperia, a spin-off from NXP Semiconductors that is owned by Shanghai, China-based Wingtech.

The company previously got the go-ahead to buy out the fab, but ran into financial difficulties. However, the government has re-approved the deal for more than $80 million.

In 2021, Nexperia, who was originally a customer of Newport Wafer Fab, was given the go-ahead to begin the transfer of assets of the fab after the government reviewed the deal on national security grounds.

This was after a consortium of semiconductor businesses entered into the bid to purchase the Wales-based factory, which is the U.K.’s largest chip producer. This was an effort to thwart the takeover from Chinese-based Nexperia, which put in a bid for the fab in July for about $87.4 million.

Controversial decision

The move was controversial due to the U.K.’s concerns regarding Chinese ownership of the fab and previous issues involving Huawei and national security.

The government, along with the consortium, saw the race to acquire Newport Wafer Fab as part of the move globally to expand semiconductor manufacturing due to geopolitical issues and the aftermath of COVID-19. Fabs are being bought and built to meet demand today due to the ongoing chip shortage but also to meet future semiconductor demand that is forecast to grow 5% over the next decade.

This also has companies turning to new sources to find chips such as electronic distributors and e-commerce chip distributors.

European chip goals

If the fab was transferred to Chinese-based interests, it may cause potential problems with Europe’s own goal of expanding its semiconductor manufacturing to 20% of the global supply by 2030.

To bolster this effort, U.S.-based Intel unveiled plans to spend some $87 billion over the next decade on new fabs and R&D in Europe including a mega-site in Magdeburg, Germany, a design hub in France and R&D, manufacturing and foundry services in Italy, Poland and Spain.

This investment comes as Europe announced the European Chips Act, which would provide about $50 billion in incentives and subsidies to entice manufacturers to build new semiconductor factories in the region. This European investment by Intel may have been spurred by the Act along with Intel’s other fab builds taking place in the U.S. in Ohio and Arizona as a result of the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act.

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