UK forces Chinese-owned company to offload Newport Wafer Fab
(2022/11/17)
- Reference: 1668665049
- News link: https://www.theregister.co.uk/2022/11/17/uk_forces_newport_fab_sale/
- Source link:
The UK's secretary of state for Business, Energy and Industrial Strategy has ordered that the Chinese owner of the Newport Wafer Fab sell off its interest in the facility on grounds of national security.
Secretary Grant Shapps on Wednesday published an [1]order [PDF] in which he explained ownership of the facility represents a national security risk as:
i. 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; and ii. the location of the site could facilitate access to technological expertise and know-how in the South Wales Cluster (“the Cluster”), and the links between the site and the Cluster may prevent the Cluster being engaged in future projects relevant to national security.
The Newport Wafer Fab is the UK's largest chipmaking facility. In July 2021 it was sold for £63 million ($111,500,000) to Dutch company Nexperia, which itself became a subsidiary of Chinese outfit Wingtech Technology in 2018.
News of the sale to Nexperia saw then-prime minister Boris Johnson [2]promise to a conduct a national security investigation into the takeover. That probe led to a damning report titled [3]"Sovereignty for sale: follow-up to the acquisition of Newport Wafer Fab" and allegations that the probe ordered by Johnson had amounted to nothing. A full assessment under the National Security and Investment Act was then instigated, with the result that Shapps has now ordered Nexperia to sell at least 86 percent of the Newport facility.
Nexperia has [4]published a statement condemning the decision.
[5]
"Nexperia, headquartered in The Netherlands, is shocked by the UK Government's decision to order the divestment of 86% of its semiconductor wafer factory in South Wales … despite the acquisition being cleared by two previous security reviews," the statement opens, before stating the company "does not accept the national security concerns raised."
[6]
[7]
"The far-reaching remedies which Nexperia offered to fully address the Government's concerns have been entirely ignored," the statement adds.
"The UK Government chose not to enter into a meaningful dialogue with Nexperia or even visit the Newport site," the document continues. "More than 500 employees in Newport also raised their own significant concerns about such a divestment – the Government has chosen not to listen to them and instead taken this decision which puts the livelihoods of them and their families, as well as more than £100m of taxpayers' money, completely unnecessarily at risk."
[8]
"Nexperia will now challenge the order and will do everything possible to keep the factory and protect its employees in South Wales."
The statement asserts that Nexperia "proposed far-reaching remedies to BEIS's Investment Security Unit that fully address even these potential concerns." Among those remedies was a pledge "not to conduct the compound semiconductor activities of potential concern and to provide the UK Government with direct control and participation in the management of Newport."
[9]Arm founder says the UK has no chance of tech sovereignty
[10]UK.gov's decision on Newport Wafer Fab ownership delayed for third time
[11]UK government will not step in over Altice’s growing stake in BT
[12]UK blocks China from licensing Manchester Uni's robot vision tech
Nexperia says "no dialogue" took place between the Government and Nexperia on these proposals and that none of the three responsible secretaries of state who had power to decide the matter responded to Nexperia's requests for dialogue.
"We rescued an investment-starved company from collapse," said Nexperia's UK Country Manager, Toni Versluijs. "We have repaid taxpayer loans, secured jobs, wages, bonuses and pensions, and agreed to spend more than £80 million on equipment upgrades since early 2021. Those who sold the business to us agreed that it was the only viable solution."
Versluijs vowed to appeal the decision.
[13]
The decision was made after the conclusion of a G20 summit at which a hoped-for meeting between UK prime minister Rishi Sunak and Chinese president Xi Jinping was cancelled after "scheduling issues". Sunak was called into impromptu meetings with European colleagues to discuss an explosion of Russian ordnance in Poland, so the scheduling explanation is plausible.
The UK recently [14]ordered local telcos to remove Huawei kit from their 5G networks, and [15]blocked the sale of chip design firm Pulsic Limited to Chinese buyers – indicators of London's keenness to keep local tech out of Beijing's hands. ®
Get our [16]Tech Resources
[1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1118350/NWF_Final_Order_Public_Notice_16112022.pdf
[2] https://www.theregister.com/2021/07/07/uk_newport_wafer_fab_probe/
[3] https://www.theregister.com/2022/05/26/security_probe_nexperia_sale/
[4] https://www.nexperia.com/about/news-events/press-releases/Nexperia-is-shocked-by-the-Secretary-of-State-s-order-to-divest-Newport-Wafer-Fab.html
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Y3YUSo6rhAa0ZasKUpk8WwAAAEs&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[9] https://www.theregister.com/2022/09/29/arm_founder_uk_tech_sovereignty/
[10] https://www.theregister.com/2022/10/04/newport_wafer_fab_decision_delayed_nexperia_china/
[11] https://www.theregister.com/2022/08/23/uk_bt_national_security_altice/
[12] https://www.theregister.com/2022/07/22/uk_blocks_university_china_license/
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y3YUSo6rhAa0ZasKUpk8WwAAAEs&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://www.theregister.com/2022/10/13/uk_telcos_huawei_ban/
[15] https://www.theregister.com/2022/08/19/uk_chip_company_sale_china/
[16] https://whitepapers.theregister.com/
Secretary Grant Shapps on Wednesday published an [1]order [PDF] in which he explained ownership of the facility represents a national security risk as:
i. 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; and ii. the location of the site could facilitate access to technological expertise and know-how in the South Wales Cluster (“the Cluster”), and the links between the site and the Cluster may prevent the Cluster being engaged in future projects relevant to national security.
The Newport Wafer Fab is the UK's largest chipmaking facility. In July 2021 it was sold for £63 million ($111,500,000) to Dutch company Nexperia, which itself became a subsidiary of Chinese outfit Wingtech Technology in 2018.
News of the sale to Nexperia saw then-prime minister Boris Johnson [2]promise to a conduct a national security investigation into the takeover. That probe led to a damning report titled [3]"Sovereignty for sale: follow-up to the acquisition of Newport Wafer Fab" and allegations that the probe ordered by Johnson had amounted to nothing. A full assessment under the National Security and Investment Act was then instigated, with the result that Shapps has now ordered Nexperia to sell at least 86 percent of the Newport facility.
Nexperia has [4]published a statement condemning the decision.
[5]
"Nexperia, headquartered in The Netherlands, is shocked by the UK Government's decision to order the divestment of 86% of its semiconductor wafer factory in South Wales … despite the acquisition being cleared by two previous security reviews," the statement opens, before stating the company "does not accept the national security concerns raised."
[6]
[7]
"The far-reaching remedies which Nexperia offered to fully address the Government's concerns have been entirely ignored," the statement adds.
"The UK Government chose not to enter into a meaningful dialogue with Nexperia or even visit the Newport site," the document continues. "More than 500 employees in Newport also raised their own significant concerns about such a divestment – the Government has chosen not to listen to them and instead taken this decision which puts the livelihoods of them and their families, as well as more than £100m of taxpayers' money, completely unnecessarily at risk."
[8]
"Nexperia will now challenge the order and will do everything possible to keep the factory and protect its employees in South Wales."
The statement asserts that Nexperia "proposed far-reaching remedies to BEIS's Investment Security Unit that fully address even these potential concerns." Among those remedies was a pledge "not to conduct the compound semiconductor activities of potential concern and to provide the UK Government with direct control and participation in the management of Newport."
[9]Arm founder says the UK has no chance of tech sovereignty
[10]UK.gov's decision on Newport Wafer Fab ownership delayed for third time
[11]UK government will not step in over Altice’s growing stake in BT
[12]UK blocks China from licensing Manchester Uni's robot vision tech
Nexperia says "no dialogue" took place between the Government and Nexperia on these proposals and that none of the three responsible secretaries of state who had power to decide the matter responded to Nexperia's requests for dialogue.
"We rescued an investment-starved company from collapse," said Nexperia's UK Country Manager, Toni Versluijs. "We have repaid taxpayer loans, secured jobs, wages, bonuses and pensions, and agreed to spend more than £80 million on equipment upgrades since early 2021. Those who sold the business to us agreed that it was the only viable solution."
Versluijs vowed to appeal the decision.
[13]
The decision was made after the conclusion of a G20 summit at which a hoped-for meeting between UK prime minister Rishi Sunak and Chinese president Xi Jinping was cancelled after "scheduling issues". Sunak was called into impromptu meetings with European colleagues to discuss an explosion of Russian ordnance in Poland, so the scheduling explanation is plausible.
The UK recently [14]ordered local telcos to remove Huawei kit from their 5G networks, and [15]blocked the sale of chip design firm Pulsic Limited to Chinese buyers – indicators of London's keenness to keep local tech out of Beijing's hands. ®
Get our [16]Tech Resources
[1] https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1118350/NWF_Final_Order_Public_Notice_16112022.pdf
[2] https://www.theregister.com/2021/07/07/uk_newport_wafer_fab_probe/
[3] https://www.theregister.com/2022/05/26/security_probe_nexperia_sale/
[4] https://www.nexperia.com/about/news-events/press-releases/Nexperia-is-shocked-by-the-Secretary-of-State-s-order-to-divest-Newport-Wafer-Fab.html
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Y3YUSo6rhAa0ZasKUpk8WwAAAEs&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
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[9] https://www.theregister.com/2022/09/29/arm_founder_uk_tech_sovereignty/
[10] https://www.theregister.com/2022/10/04/newport_wafer_fab_decision_delayed_nexperia_china/
[11] https://www.theregister.com/2022/08/23/uk_bt_national_security_altice/
[12] https://www.theregister.com/2022/07/22/uk_blocks_university_china_license/
[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Y3YUSo6rhAa0ZasKUpk8WwAAAEs&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[14] https://www.theregister.com/2022/10/13/uk_telcos_huawei_ban/
[15] https://www.theregister.com/2022/08/19/uk_chip_company_sale_china/
[16] https://whitepapers.theregister.com/
Andy The Hat
Seems simple - Government buys the factory for £63m, it runs independently, provides jobs, makes money, pays tax and is a net income stream for the Government.
What's the catch? Does Newport do it's own R&D or is it reliant on external sources for that so if sold out of its umbrella company it will quickly die? Is it crying out for investment or at the top of its game? Is it a small fish in a big pond and is too expensive to run? Whilst the Sky(?) twitter report linked above was nice and flowery it wasn't really pitched at an audience who were expected to understand the world of fabs, chip R&D and long term macro economics. Standing under an HF pipe to take a picture shows some courage (or lack of knowledge) however well labelled and pretty it looked!
Perhaps we need more background digging into to this story to be able to make a serious judgement about it. My feeling is they produce specialised silicon for the UK military and the Government are scared about that.
Look Up.
Gordon 10
Its all on that twitter thread.
So what's new
Al fazed
Personally I no longer go "WTF ?" when I read about UK Govermins meddling in technology business.
Oh wouldn't they all (politicians) love UK to be the world's IT star............
Dream on...............
One minute we are at war with China 'cos America says so. The we are flogging IT tech to China, then changing our mind.
The bset bit about this whole story is that the company concerned has attempted to engage the Govermins in dialogue, as were the Chinese, but our head pol IT ician preferred to go look at a already burned out firework....................
Ahem..........Soz folks, once thought these muppets actually knew what theywere doing..........But I was only 6 at the time..
ALF
Interesting thread on this here. Allegedly what appear to be a very ordinary fab was actually doing some cool stuff.
https://twitter.com/EdConwaySky/status/1592983101172748288?s=20&t=fX_jjpJRHzS7C6fJLyIhRA