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LONDON – Newport Wafer Fab, the UK’s largest chipmaker, will be acquired by Chinese semiconductor company Nexperia for around £ 63 million ($ 87 million) next week, according to two sources close to the deal who asked to stay in the deal. anonymity because the information is not yet public.
Nexperia, a Dutch firm that is 100% owned by China’s Wingtech Technology, told CNBC on Friday that negotiations for the deal are ongoing.
Located in Newport, South Wales, NWF’s privately owned chip plant dates back to 1982 and is one of the few semiconductor manufacturers in the UK.
Nexperia is scheduled to announce the acquisition as early as Monday or Tuesday, the sources said.
“We are in constructive discussions with NWF and the Government of Wales about the future of NWF,” said a Nexperia spokesperson. “Until we have reached a conclusion, we cannot comment further.”
NWF and Wingtech Technology did not immediately respond to CNBC’s request for comment.
The deal comes during a global chip shortage that has prompted countries to try to become more independent when it comes to semiconductor production. The vast majority of today’s chips are made in Asia, with TSMC from Taiwan, Samsung from South Korea, and SMIC from China among the world’s largest chip producers.
Tom Tugendhat, head of the UK government’s China Research Group and chair of the Foreign Affairs Select Committee, said he was concerned about a possible NWF takeover in a letter to UK Business Minister Kwasi Kwarteng in June. .
“I must emphasize again that a Chinese entity taking over the UK’s leading 200mm silicon and semiconductor technology development and processing facility, in my opinion, represents a major national security and economic issue. Tugendhat said.
He urged the UK government to review the deal under the National Security and Investment Act, which was introduced in April as part of an effort to protect the nation’s tech companies from overseas acquisitions when there is a risk. economic or security threat.
“This is the last remaining largest advanced semiconductor factory in England that is sold to the Chinese and the British government is not doing shit about it,” said a source, adding that they should at least try to get a billion dollars. for her. .
A UK government spokesperson told CNBC: “We are aware of Nexperia’s expected acquisition of Newport Wafer Fab. While we do not consider it appropriate to intervene at this time, we will continue to monitor the situation closely and will not hesitate to use our powers under the Companies Act should the situation change. “
They added: “We remain committed to the semiconductor industry and the vital role it plays in the UK economy.”
The £ 63 million price tag for NWF is much lower than the $ 900 million Texas Instruments announced it will pay for a vacant Micron factory in Utah this week.
NWF has a number of outstanding debts, including £ 20 million to HSBC and £ 18 million to the Welsh government, one of the sources said, adding that these will be paid after the sale. Meanwhile, Drew Nelson, the CEO who became NWF’s majority shareholder after he acquired Infineon’s business from Germany four years ago, will receive around £ 15 million, according to a person familiar with the terms.
NWF manufactures silicon chips that are used in power supply applications for the automotive industry, which has been particularly affected by chip shortages. The company has also been developing more advanced “compound semiconductors,” which are faster and more energy efficient.
Under the agreement, Nelson is allowed to spin off NWF’s compound semiconductor portion and plans to reinvest his earnings in this new company, according to this person. It is also allowed to keep the Newport Wafer Fab name.
The deal comes after Cambridge Arm’s chip designer, often regarded as the crown jewel of the UK tech industry, agreed to be acquired by US chip giant Nvidia for $ 40 billion. The acquisition, however, is being investigated by regulators around the world after rival Qualcomm and others objected.
With tensions rising between China and the West, other countries are investigating Chinese technology acquisitions before they are approved.
Earlier this month, South Korea launched a review after Beijing-based Wise Road Capital agreed to a deal to buy semiconductor company MagnaChip, saying it is a “national core technology.” The United States Department of the Treasury also requested that the parties involved in the transaction file a notice with the Committee on Foreign Investment in the United States.
In March, the Italian government blocked Chinese company Shenzhen Investment Holdings from acquiring a majority stake in LPE, a Milan-based semiconductor company, and hailed it as a sector of “strategic importance.”