Newport Wafer Fab acquisition in limbo after Kwarteng delays decision

The UK government has delayed its decision on the Newport Wafer Fab acquisition by Nexperia for 45 days, as the firm’s UK boss says staff are asking if they will still have jobs after the review.

Under the terms of the National Security and Investment (NSI) Act the 30-day government enquiry into a relevant acquisition can be extended by another 45 days – and potentially even longer if the government decides it needs to call witnesses. This decision by Kwasi Kwarteng, secretary of state at BEIS (at least, at time of writing), kicks any final decision about the Newport Wafer Fab acquisition to at least late September.

Nexperia bought Newport Wafer Fab (NWF), the UK's largest semiconductor fabrication plant, in July 2021, after NWF ran into financial trouble following order cancellations at the start of the pandemic. Dutch firm Nexperia, a spin-out of NXP Semiconductor, was bought by Chinese electronics manufacturer Wingtech in 2018.

Before the Newport Wafer Fab acquisition, Nexperia's UK operations consisted of a MOSFET plant in Manchester. The company also operates sites in Hamburg, Malaysia, China and the Philippines. If the government finds the NWF acquisition is not in the national interest, Nexperia may be forced to undo the deal.

This latest delay was described as “anticipated” by Nexperia’s UK country manager, Toni Versluijs, in a statement to The Stack. He said Nexperia “look[ed] forward to cooperating further with the [Investment Security Unit] and BEIS… to bring about a swift resolution of this case”.

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Versluijs made similar comments at an oral evidence session of the BEIS select committee’s inquiry into the UK semiconductor industry this week. At that hearing he acknowledged “matters of national security need to be investigated in a good and diligent way”.

“At the same time… investigation also needs to be done swiftly. And we see that our customers are becoming impatient on the clarity. And also for some of our employees,” added Versluijs.

“Last week, Friday, a young lady in Newport stepped into the office of our general manager, and she said, look, I just bought a new house. After this review, will I still have a job? And I think it's in everybody's interest to give clarification – if not for Nexperia, for people like the young lady.”

He also addressed the “rumours” about NWF being shut, which he blamed on a “wrong interpretation” of a report by Sir Geoffrey Owen, head of industrial policy at Policy Exchange. Policy Exchange published a report by Owen in late June on the semiconductor sector, which contained a chapter looking at the Newport Wafer Fab acquisition by Nexperia.

“Geoffrey explicitly asked me to take the opportunity today to put a couple of things straight on that… to make it clear that the Policy Exchange paper was in no way predicting the closure of Newport – it was merely reporting what some opponents of the acquisition have been saying,” said Versluijs.

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“We're not planning to shut any operations. We've been in the UK on the site in Stockport for more than 50 years, we've been in Hamburg for more than 50 years, we invested big time in Manchester, we invested big time in Newport, created the jobs. We are here to stay, we want to work in the local ecosystem, and enable the local ecosystem and the UK semiconductor industry to be successful.”

(Looking at Owen’s report, it is easy to see how it might have been taken to be predicting the closure of the fab after the Newport Wafer Fab acquisition, as this is described as a “strong possibility” in one paragraph, if read in isolation. But in its full context, as presented below, the statement is clearly from the point of view of those opposed to the acquisition.

“Those who believe that the Nexperia takeover should be blocked argue that Chinese ownership is dangerous for several reasons… Third, there is a strong possibility that when [Nexperia owner] Wingtech’s Shanghai plant reaches full capacity the company might close Newport and shift production to China, thus supporting China’s drive to reduce semiconductor imports.”

The report continues: “Mr Kwarteng will have to weigh these points – most of which are strongly contested by Nexperia – against the argument that, through the NWF acquisition, a large, well-regarded semiconductor company, with a long record of investing in the UK, is injecting capital and technology into a factory that needs to be modernised and providing it with access to a wide range of international customers.”)

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Versluijs’ full statement to The Stack reads: “As anticipated, the ISU (Investment Security Unit) informed us on Wednesday 6th July that it needs more time to complete its review of Nexperia’s acquisition of the Newport site. We look forward to cooperating further with the ISU and BEIS (Department for Business, Energy & Industrial Strategy) to bring about a swift resolution of this case that benefits the UK semiconductor industry, its customers and Nexperia.

“Our contribution to the UK economy is paramount. We have been operating here for over 50 years and employ over 1,500 people, recently investing £160 million in our Newport and Manchester production sites to expand our UK activities. Our objective is to help meet the growing global semiconductor demand to ensure that our customers such as Jaguar Land Rover can operate without interruption.

“We continue to work locally in Newport and Manchester to expand skills in STEM, invest in education and secure the future of our employees. We look forward to a positive outcome from the ISU assessment as soon as possible, both for the UK and Nexperia.”