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US chip company Vishay Intertechnology has agreed to buy Newport Wafer Fab for $177mn from Chinese-owned Nexperia, drawing a line under years of uncertainty about the fate of the largest chip company in the UK.
The UK government opted to block the sale of Newport Wafer Fab to Nexperia, which is owned by China’s Wingtech Technology, on national security grounds last November after months of wrangling that had left the biggest British chipmaker in limbo.
Toni Versluijs, country manager of Nexperia UK, said that Nexperia “would have preferred to continue the long-term strategy it implemented when it acquired the investment-starved fab in 2021 and provided for massive investments in equipment and personnel”.
But, he said, “these investment plans have been cut short by the unexpected and wrongful divestment order made by the UK government in November 2022”, adding that Nexperia had been forced to reduce the headcount at the plant by 100 to around 350.
Pennsylvania-based Vishay Technology, which has a market capitalisation of $3.2bn and sells semiconductors and electronic parts in Asia, Europe and the Americas, said it aimed to spend $1.2bn to increase its global footprint over the next three years.
Joel Smejkal, Vishay president and chief executive, said the acquisition would be “instrumental” to its goal of expanding capacity and would also “ensure the facility becomes a fully operational and profitable fab”.
Nexperia bought Newport Wafer Fab for around £60mn ($74mn) in 2021, having previously owned 14 per cent of the company. It did not disclose how much profit it had made from its investment but a person close to the company noted that Nexperia had invested tens of millions of pounds in the plant.
The deal draws a line under a politically fraught tussle over the future of a previously obscure British company that produces silicon wafers used in cars.
The sale of one of Britain’s only strategic semiconductor assets to a Chinese company faced a severe backlash from British politicians, industry executives and foreign powers who saw it as a sign that the government was failing to protect strategic assets and leaving itself vulnerable to intellectual property theft.
Initially the government waved through the deal, after its national security adviser, Sir Stephen Lovegrove, concluded in a retrospective probe that there were insufficient reasons to block it on security grounds given the company’s low-tech nature.
But ministers changed their minds as political and industry concerns grew about the broader resilience of semiconductor supply chains amid international geopolitical uncertainty.
Kwasi Kwarteng, the former business secretary, announced in May last year that he was “calling in” Nexperia’s acquisition of Newport under the National Security and Investment Act, new legislation under which the government is able to limit or block transactions involving strategic national assets.
Nexperia, which became Newport Wafer Fab’s second-biggest shareholder in 2019, launched a takeover of the chipmaker in 2021, when the Welsh company was struggling to pay its debts and faced potential bankruptcy.
The plant has since sold its wares exclusively to Nexperia, stoking fears of tech transfer from the UK to China.
The chip manufacturer became a touchstone in the global battle for chips, some of the most ubiquitous components in modern technology.
Production of chips is heavily concentrated in Taiwan, where concern has grown about a potential conflict with China, leading governments around the world to diversify their supply chains.
Vishay Intertechnology’s share price dropped nearly 4 per cent in morning trading following the announcement of the acquisition.
