Nexperia sells Newport Wafer Fab for $177mn to US chip company

Vishay Intertechnology, a US-based chip company, has agreed to purchase Newport Wafer Fab from Chinese-owned Nexperia for $177mn. This agreement puts an end to years of uncertainty regarding the fate of the UK’s largest chip manufacturer.

After months of wrangling, the UK government decided to block the sale to Nexperia owned by China Wingtech Technology on national security grounds in November last year.

Toni Versluijs said that Nexperia UK “would have preferred” to continue its long-term strategy when it acquired the investment starved fab by 2021, and made massive investments in equipment, personnel, and technology.

He said that “these plans for investment have been cut off by the unexpected and wrong divestment orders made by the UK Government in November 2022”. Nexperia was forced to reduce its headcount by 100, to about 350.

Vishay Technology of Pennsylvania, with a market cap of $3.2bn, sells electronic components and semiconductors in Asia, Europe, and the Americas. It said that it would spend $1.2bn over the next 3 years to expand its global footprint.

Joel Smejkal said that the acquisition was “instrumental” in achieving Vishay’s goal of increasing capacity. It would also “ensure that the facility is fully operational and profit-making”.

Nexperia acquired Newport Wafer Fab in 2021 for approximately £60mn (roughly $74mn), having owned previously 14 percent of the company. The company did not reveal how much it made on its investment, but a source close to the firm said that Nexperia invested tens and millions of pounds into the plant.

The deal puts an end to a political scuffle over the future of an obscure British company which produces silicon wafers for cars.

Foreign powers, British politicians and industry executives were outraged by the sale of one of Britain’s strategic semiconductor assets to China. They saw this as an indication that Britain was not protecting its strategic assets.

The government initially approved the deal after Sir Stephen Lovegrove concluded that the low-tech nature of the company was not enough to justify blocking it.

Ministers changed their mind as concerns from the industry and political leaders grew over the resilience of supply chains for semiconductors in a geopolitical environment that is uncertain.

Kwasi Kwarteng (the former business secretary) announced in May of last year that the acquisition by Nexperia of Newport was being “called in” under the National Security and Investment Act. This new legislation allows the government to restrict or block transactions with strategic assets.

Nexperia became Newport Wafer Fab’s second largest shareholder in 2019. In 2021, the Welsh company, struggling to pay off its debts, was facing bankruptcy.

Since then, the plant has sold its products exclusively to Nexperia. This has sparked fears about tech transfer from Britain to China.

The chip maker became a touchstone for the global war over chips, which are some of the most common components in modern technology.

The production of chips is largely concentrated in Taiwan. As a result, governments from around the globe have begun to diversify their supply chain due to concerns about a possible conflict with China.

Vishay Intertechnology shares dropped by nearly 4% in the morning following the announcement.