National security restrictions blamed as Welsh chip factory proposes to axe 100 jobs, as search for new owner continues
The national security saga surrounding the UK’s largest chipmaking facility, Newport Wafer Fab (NWF), took a fresh turn this week.
The BBC reported that NWF has revealed a proposed “restructuring plan” that will reduce the workforce by approximately 100 staffers. The plant is said to employ 500 people.
It comes after the UK government in July 2021 stepped in when it emerged that Newport Wafer Fab was being acquired by Dutch chip firm Nexperia for just £63 million ($87 million).
National security concerns immediately surfaced over the fact that Nexperia itself was owned by a Chinese chip firm called Wingtech Technology.
Newport Wafer Fab is based in Newport, Wales, and it is a high volume 200mm wafer fab that makes silicon chips used in power supply applications for the car industry.
The fab has also been developing more advanced “compound semiconductors,” which are faster and more energy efficient.
NWF also makes the wafers that electronic circuits are printed onto, and it manufactures some 32,000 wafers a month.
Some of its work is also potentially sensitive as Newport Wafer Fab has over a dozen research contracts with the UK government.
Indeed, at least one of contracts involves developing chip technology for a radar system that would be used in fighter jets.
As soon as the Nexperia acquisition was announced in 2021, national security concerns were immediately raised by Tom Tugendhat MP, leader of the UK government’s China Research Group and chairman of the Foreign Affairs Select Committee.
Tugendhat at the time voiced his concerns that the UK was selling a prized asset to a Chinese-owned company, when there was a global chip shortage triggered by the Covid-19 pandemic.
National security review
Shortly after that concern was voiced, former Prime Minister Boris Johnson ordered a review of the acquisition of Newport Wafer Fab.
Then in May 2022, the government’s full national security review of the purchase began in earnest.
In July 2022 former business secretary, Kwasi Kwarteng delayed making a decision on the deal for another 45 days until 5 September.
A decision about the deal was repeatedly delayed for months, until November 2022, when the UK government issued its ‘final order’ and blocked the deal on national security grounds.
Nexperia was ordered to sell at least 86 percent of NWF.
Now this week Newport Wafer Fab has announced a consultation process and was quoted by the BBC as saying: “This is a business decision that has not been taken lightly but is one that we are taking to protect the future viability of the site.”
“As a result of the Secretary of State’s Divestment Order in November 2022, and the restrictions imposed by the UK government, Nexperia has been forced to cancel its investment plans aimed at making the Newport site fit for the future, by introducing new technology and products,” it said.
It also blamed the weakness in the global semiconductor market for the job losses.
It said the staff reduction would take numbers back to the levels of its “acquisition to save Newport Wafer Fab from bankruptcy in July 2021.”
The company said it will take “many months” until the site’s future becomes clearer, the statement adding: “The Judicial Review (into the issue) process is disappointingly slow, for reasons beyond Nexperia’s control.”
The UK government spokesman told the BBC it understand this is a “concerning time” for workers at Newport Wafer Fab.
“While we don’t comment on national security decisions, we recognise the significance of Nexperia Newport to the local economy and the uncertainty faced by its employees and families,” said a spokesperson.
“Our commitment remains towards a successful divestment of the site.”