China's chip risk puts the UK in a tight spot

Downing Street wants to scrutinize a completed purchase: Britain's largest semiconductor plant has fallen into Chinese hands

Boris Johnson (photo: Daniel Leal-Olivas - WPA Pool / Getty Images) The UK 's largest chip plant has been acquired by the Dutch - based but Chinese - owned company Nexperia: the UK government is now considering scrutinizing the £ 63 million operation. The Newport Wafer Fab plant is part of a cluster in the semiconductor supply chain that the Welsh government hoped to expand, but will now become a subsidiary of Wingtech Technology, a Chinese automobile chip maker, listed on the Shanghai Stock Exchange. Boris Johnson wants to see this straight after the government has already ousted Huawei from key infrastructures such as the 5G network and a law was enacted last year strengthening industrial takeover powers for security reasons.

The company employs 450 people and has been in business since 1980, but it's not a good time: turnover has dropped to £ 30m in 2020, from £ 49m in 2019. Nwf is part of a group of organizations together with the universities of Cardiff and Swansea, which aims to make Wales a world technology leader, but in 2019 Nexperia became its second largest shareholder, until the 100% complete acquisition. Also two years ago, Nexperia was in turn acquired by the Chinese Wingtech whose shares, according to data published online by Datenna, a consulting firm on Chinese investments in Europe, are attributable through different levels of ownership to Chinese government entities for 30 % a “rather important” quantity.

China has the largest chip market, but only 16% of those it uses are manufactured within its own borders. There would therefore be a Chinese risk of self-sufficiency in a moment of crisis in the sector. The precedents in Europe involve the acquisition of the British Imagination Technologies (semiconductor and software design) by Canyon Bridge for 763 million dollars in 2017. Tsinghua Unigroup acquired the French Linxens for 2.6 billion dollars in 2018. Jianguang, a capital management fund, did the same with Dutch Ampleon for about $ 2 billion in 2015. In all these cases there is the influence of the Chinese government, according to Datenna's analysis reported by CNBC.

Last spring Mario Draghi, head of the Italian government, exercised the rights of golden power to block the acquisition of Lpe, a small Lombard semiconductor company, by Chinese entities.


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