China takeover of UK silicon wafer plant to be reviewed over security

Boris Johnson said on Wednesday that the UK government would probe the takeover of the UK’s largest silicon wafer manufacturer by a Chinese-backed company on national security grounds.

The government has grappled with Chinese ownership of crucial parts of UK infrastructure, notably by rejecting Huawei having a role in its 5G cellular network. Legislation was introduced last year to strengthen powers to block takeovers based on security concerns.

Newport Wafer Fab, which produces silicon wafers at its plant in south Wales and employs 450 people, was recently purchased by Nexperia, a Netherlands-based company that is Chinese owned and already operates a similar facility in Manchester.

The company is part of a cluster of semiconductor supply chain companies in the south Wales area that the Cardiff government hopes to expand. Drew Nelson, the outgoing chair of Newport Wafer Fab, said the takeover would secure the future of the plant.

Speaking at a parliamentary select committee on Wednesday, Johnson said concerns about the takeover had been flagged to Westminster by the Welsh government. Sir Stephen Lovegrove, the national security adviser, will investigate the takeover.

“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,” he said, adding: “I have asked the national security adviser to review.”

But the Welsh government said it had not made a formal request for Johnson to intervene: “The Welsh government has not made a request to the UK government to review the takeover of Newport Wafer Fab.”

Ministers have previously said the government would not intervene in the Newport Wafer Fab deal.

Tom Tugendhat, chair of the foreign affairs select committee, wrote to business secretary Kwasi Kwarteng in May to ask whether the takeover could be probed over national security concerns.

Citing that the company is “one of the UK’s few remaining semiconductor manufacturing facilities”, Tugendhat said the company was being “targeted for a forced takeover”.

“Given the strategic criticality of semiconductors and the importance of the UK tech sector for self-sufficiency underpinning our industrial base and R&D capabilities, please could you advise why the government considers that this transaction does not constitute a matter of national security,” he wrote.

Kwarteng responded that the government had been in close contact with Newport Wafer Fab but declined to intervene under national security provisions.

“The government has been in close contact with Newport Wafer Fab but does not consider it appropriate to intervene at the current time. We will continue to monitor the situation closely and will not hesitate to use our powers should the situation change,” he wrote.