UK’s Largest Chipmaker Acquired by Chinese-Owned Nexperia Amid Ongoing Semiconductor Crisis

Representatives from Nexperia, a subsidiary of Shanghai-based Wingtech Technology, announced on Monday their acquisition of the largest producer of semiconductors in the UK, Newport Wafer Fab (NWF). Following the agreement’s implementation, the Welsh facility is to be redubbed “Nexperia Newport”.

According to unnamed sources cited by CNBC, the total value of the deal stands at roughly 63 million British pounds ($87 million). Further financial details of the transaction were not disclosed.

Headquartered in the Netherlands, Chinese-owned Nexperia is a global leader in the mass production of computer chips and other essential technologies required to manufacture electronic goods. Since 2019, it has served as the second-largest shareholder in NWF.

Nexperia’s parent company Wingtech was established in 1993 and now focuses on the research, development and manufacturing of smartphones, computers and other electronic devices. Listed on the Shanghai Stock Exchange, the Chinese firm currently holds a market capitalization of about 125 billion yuan ($19 billion).

The newly acquired NWF facility, established in 1982 by now-defunct British firm INMOS, is currently capable of producing over 35,000 wafers – a vital building block in semiconductors – per month. According to an official press release, “this acquisition enhances the automotive-qualified product supply capability and the market share of Nexperia”.

NWF specializes in 200 mm wafer fabs, which, while not embodying the cutting edge of recent technological advancements in the industry, are highly versatile and enjoy steady and sizeable demand from all types of electronics manufacturers.

One analyst commented to CNBC that the deal’s price tag is considerably lower than similar purchases of semiconductor plants, perhaps due to the sizeable debt NWF owes to several entities, including 20 million pounds to HSBC and 18 million pounds to the Welsh government.

The acquisition comes amid a global crisis in the semiconductor industry as firms grapple with twin pressures of skyrocketing demand for chips in response to the COVID-19 pandemic and disruption to supply chains caused by protectionist policies.

Chief Operations Officer of Nexperia Achim Kempe expressed that the firm “has ambitious growth plans and adding Newport supports the growing global demand for semiconductors”.

Meanwhile, some British policymakers have balked at the acquisition, citing concerns that the agreement may run afoul of the country’s National Security and Investment Act.
Tom Tugendhat, a Conservative Member of Parliament and Chairman of the Foreign Affairs Committee, decried in a letter last month what he described as “a deal involving a British company critical to the economic security of a variety of manufacturing industries falling into the hands of an entity that was set up to serve the needs of a systemic competitor”.

Following Monday’s news confirming the acquisition, Tugendhat took to Twitter, writing “this is a difficult decision to square with the comments made alongside our US allies and others at the G7,” alluding to the thorny geopolitical factors that continue to weigh on the semiconductor industry.

On the other hand, Beijing-backed outlet Global Times released a report Tuesday entitled “Nexperia’s NWF deal shows potential for China’s M&A,” pointing out that the total value of domestic firms’ overseas acquisitions in the first quarter of 2021 surpassed $17.2billion – 45% of which occurred in the European market. The figures, sourced from a report by consulting firm EY, also show that the scale of Chinese M&As with European counterparts is up 268% year-on-year.

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A spokesperson for the devolved Welsh government stated that the deal will purportedly bring 400 jobs to the region, and that any consideration of potential national security issues vis-à-vis Nexperia’s relationship to foreign entities would remain the responsibility of the central UK government.