The UK on Wednesday ordered Chinese-owned technology firm Nexperia to sell at least 86% of Britain’s biggest microchip factory, Newport Wafer Fab, citing national security concerns.

The decision follows a long review under the new UK National Security and Investment Act 2021 that probed Nexperia’s 2021 acquisition of Newport Wafer Fab.

The legislation went into effect in January, allowing the British government to review and potentially block acquisition and investment deals in sensitive industries. The law can apply retrospectively to deals completed since November 2020.

The government said that Nexperia’s control of the factory in Newport posed a national security risk that could result in technology and know-how leaks to China from compound semiconductor activities at the site. 

It noted that those activities could undermine British capabilities and the importance of the site for business and research in south Wales.

Business Minister Grant Shapps said on Twitter, “We welcome foreign trade and investment that supports growth and jobs. But where we identify a risk to national security we will act decisively.”

It is the second Chinese-related takeover blocked by the British government under the UK’s new National Security and Investment Act. In August, then Business Secretary Kwasi Kwarteng stopped a Hong Kong-based company’s acquisition deal with an electronic design firm.

In response to the UK decision, Nexperia’s UK country manager, Toni Versluijs, said, “We are genuinely shocked. The decision is wrong, and we will appeal to overturn this divestment order.”

Sign up to receive our latest news!

By submitting this form, I agree to the terms.