The British Government Asks Chinese Companies to Release Shares in the Biggest Chip Factory for Security Reasons

The largest chip factory in the UK, Newport Wafer Fab. (photo: @NewportWaferFab)

JAKARTA- The British government on Wednesday, November 16 ordered Chinese-owned technology company, Nexperia, to sell at least an 86% stake in the UK's largest microchip manufacturer, Newport Wafer Fab, following a negative national security assessment.

An overview of Nexperia's 2021 purchase of Newport Wafer Fab, now known as Nexperia Newport Limited, was announced earlier this year after legislation went into effect in January allowing the government to research and potentially block acquisitions and investments in sensitive sectors. This law can be applied retrospectively to deals concluded since November 2020.

"We welcome foreign trade and investment that supports growth and jobs. But if we identify risks to national security, we will act decisively," Business Secretary Grant Shapps said on Twitter.

The UK government, however, said there was a national security risk related to the technology and know-how that could be generated from joint semiconductor activity at the site, and the potential for such activity to undermine UK capabilities.

According to the order, the location of the site could also facilitate access to technological expertise in the area of ​​South Wales and prevent the territory from engaging in future projects relevant to national security,

Nexperia, which is headquartered in the Netherlands, said it did not accept the national security issues raised and that two previous security reviews had found no national security concerns that would provide a reason to block the acquisition.

"We are completely shocked. The decision was wrong, and we will appeal to cancel this divestment order," Nexperia UK Country Manager, Toni Versluijs, said in a statement quoted by Reuters.

The UK government says Nexperia will take its stake in Newport Wafer fab to 100% in July 2021 when it acquires an additional 86% of the company's share capital.

"The Secretary of State considers that the final order is necessary and proportionate to reduce risks to national security," the order said.