Semiconductor Equipment

Nexperia ordered to sell stake in Newport Wafer Fab

18 November 2022

The saga continues over the fate of the Newport Wafer Fab, the U.K.’s largest semiconductor facility, as the government has ordered Nexperia to sell its majority stake.

According to a report from Electronics Weekly, Nexperia must sell at least 86% of Newport Wafer Fab, following a national security review. The government said the move was being done due to a national security risk related to semiconductor technology activities and that the sale could undermine British capabilities.

Nexperia has raised concerns about the national security assumption and two previous security reviews found no concerns about the acquisition that was originally made in the summer of 2021.

“It’s good to at last see a decision in the case of Newport Wafer Fab,” said Simon Thomas, CEO and founder of Paragraf, in a statement. “The industry understands that national security is undoubtedly important, and every care must be taken to ensure that the UK and its interests are protected. Still, significant steps must be taken to minimize the delays involved in these investigations in the future.”

Thomas was involved in the British House of Commons BEIS Select Committee inquiry into the sale of Newport Wafer Fab and has been a critic of the sale.

Thomas added the U.K. government should accelerate the review of national security concerns; regarding Newport Wafer Fab as well as whether it wishes to keep semiconductor manufacturing a priority for the country and to develop and protect it.

Controversial decision

The move to allow the sale to a China-owned company was controversial due to the U.K.’s concerns regarding Chinese ownership of the fab and previous issues involving Huawei and national security.

Previously, the U.K. government was considering selling the fab to a U.S.-based consortium as an alternative to Chinese-owned Nexperia after ongoing criticism inside and outside the government that selling the fab would be a blow to national security, which semiconductors are now considered.

Nine U.S. congressmen, including Michael McCaul, a member of the House of Representatives’ Foreign Affairs Committee, sent a letter to U.S. President Joe Biden asking him to prevent the sale of Newport Wafer Fab to a Chinese-owned company. The congressmen said that China should not be allowed to gain control of any segment of the supply chain as important as semiconductors in the U.K.

Expanding manufacturing

Prior to the U.S. expressing concerns, members of the U.K. government criticized the sale at a time when Europe is looking to expand its own semiconductor manufacturing ambitions with a long-term goal of owning a 20% share of global chip making by 2030.

The race to secure capacity is causing vendors globally to invest and develop semiconductor manufacturing on their own to avoid these future issues that may come from geopolitical issues or another pandemic such as COVID-19. Fabs are being bought and built to meet demand today due the chip shortage that shook the semiconductor supply chain for two years but also to meet future semiconductor demand that is forecast to grow 5% over the next decade, according to the Semiconductor Industry Association (SIA).

Additionally, the European Chips Act, which was enacted this year, would provide about $50 billion in incentives and subsidies to entice manufacturers to build new semiconductor factories in the region. Spurred by this act, Intel Corp. has already pledged some $87 billion over the next decade to build new fabs in Germany as well as a design hub in France and manufacturing and foundry services in Italy, Poland and Spain.

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