Government blocks sale of British microchip maker to Chinese-owned company

Sale was halted by Grant Shapps over concerns that the deal posed a risk to national security

British Secretary of State for Business, Energy and Industrial Strategy, Grant Shapps. EPA

The sale of British microchip maker Newport Wafer Fab to a Chinese-owned company has been blocked by Business Secretary Grant Shapps on national security grounds.

Newport is one of the UK’s largest makers of semiconductors and there was concern over the company's reported £63 million ($75m) purchase by Nexperia, which is said to be linked to the Chinese Communist Party.

Nexperia bought a further 86 per cent of shares in Newport Wafer Fab in July 2021, taking its total shareholding to 100 per cent.

“Following a detailed national security assessment, the Business Secretary has decided to issue a final order requiring Nexperia to sell at least 86 per cent of Newport Wafer Fab to prevent against potential national security risks," said a government representative.

“The National Security and Investment regime enables us to continue championing business and open investment, whilst protecting national security.

“The UK has a number of strengths within the semiconductor sector, including in South Wales, and through our forthcoming semiconductor strategy we will enable this technology to continue to support the UK and global economy.”

Mr Shapps said in the final notice order that he considered there was a risk to national security relating to “technology and know-how that could result from a potential reintroduction of compound semiconductor activities at the Newport site, and the potential for those activities to undermine UK capabilities”.

Semiconductor chips on a circuit board. Reuters

He said “the location of the site could facilitate access to technological expertise and know-how in the South Wales Cluster, and the links between the site and the cluster may prevent the cluster being engaged in future projects relevant to national security”.

The China research group of Conservative MPs said: “Our long-term security relies on the resilience of our economy and that means ensuring we don’t allow strategic assets to fall into the hands of authoritarian powers for the sake of short-term advancement.

“I’m sure many will be relieved that we aren’t handing over critical security infrastructure to a company with well-documented links to the Chinese state.

“This decision should mark the beginning of delivering on policies that strengthen British national security, and protect our leading tech companies and research from falling into the hands of our competitors.”