Daily Management Review

Questions Being Raised Over Sale Of UK Chip Plant To A Chinese-Owned Firm


Questions Being Raised Over Sale Of UK Chip Plant To A Chinese-Owned Firm
The sale of Wales, United Kingdom based chip wafer making factory,  Newport Wafer Fab to a Chinese company has raised questions after reports surfaced that the British chip maker currently had more than a dozen research contracts with the British government.
According to reports quoting sources with knowledge of the deal, the UK government’s innovation agency, Innovate UK, is the major funder of the contracts which it does through various grant schemes that has a total value of around £55 million ($75 million).
“I don’t think anybody realized that there were a couple of defense-related projects in there,” reported quoted a source as saying.
The wafers that electronic circuits are printed onto are manufactured by NWF which has around 450 employees in the Welsh city of Newport, in the UK. based in  Netherlands, Nexperia is owned by Chinese-headquartered Wingtech which in turn is partially owned by Chinese state supported investors.
No comments on the issue were available from Nexperia and Wingtech.
Following British lawmakers called on the government to block the deal, an investigate into the acquisition was ordered to be conducted by UK Prime Minister Boris Johnson through the national security advisor, Stephen Lovegrove.
“We have to judge whether the stuff that they are making is of real intellectual property value and interest to China, whether there are real security implications,” said Johnson.
It is expected that Lovegrove will announce a verdict on the proposed investigation in a few weeks.
According to reports, questions about what the plant does and for whom were asked by Lovegrove’s team last week from companies and individuals with knowledge of NWF. A list of NWF’s contracts were provided to Lovegrove’s team by the people, said reports which also added that the government was informed about the plans of Nexperia to terminate some of the contracts so that the focus can be to ship more chip wafers to China.
However there were also contradictory reports quoting sources that denied that Nexperia was planning this and instead said that the existing contracts would be honoured by the company.  However, of the NWF’s outgoing Chairman Drew Nelson, who is slated to spin of a new firm as a part of the deal, decides to take the U.K. government contracts to his new fab, there would not be anything that Nexperia could do, said the reports quoting the source.
One of the issues of the spin off is the contracts of Innovate UK, claimed reports quoting sources.
Development of chip technology with Cardiff University that is for a radar system which is to be used in fighter jets is one of the contracts that NWF has with UK’s defense ministry. The value of the project is at £5.4 million and it is slated to deliver technology to defense contractor Leonardo, missile developer MBDA and aerospace chipmaker Arralis.
“Britain has paid for the research that makes Newport Wafer Fab a key partner in a U.K. government defense project,” said Tom Tugendhat, leader of the U.K. government’s China Research Group and chairman of the Foreign Affairs Select Committee,
“That’s why we need a complete review of the decision on national security grounds, including asking why the deal was initially waved through,” Tugendhat added.
“The U.K. and Welsh governments have spent tens of millions of pounds supporting compound semiconductor innovation in Wales — with NWF at the heart,” he added. “While there’s a global shortage, and Beijing has hopes to dominate the market, we need to be much clearer about our interests, not just company profits or rivals’ opportunities.”
(Source:www.bbc.com & www.cnbc.com)