UK Govt Allows Sale of Largest Microchip Factory to Communist Chinese-Owned Firm: Report

The British government has reportedly approved the sale of the United Kingdom’s largest microchip factory to a firm owned by the Chinese Communist Party (CCP), despite concerns over national security.

Newport Wafer Fab (NWF) in Wales, which was forced last year to sell its factory to after failing to pay its debts, will apparently be allowed by the government to be sold to the Chinese-owned firm Nexperia.

According to a report from POLITICO, a review from the government’s national security adviser, Stephen Lovegrove, found that the sale of the semiconductor producer to China did not rise to the level of presenting a national security risk. Under the National Security and Investment Act, should the sale have been determined to present such a risk, the government could have prevented the sale.

An unnamed official told the news outlet that Lovegrove came to the decision to allow the sale to go forward due to Newport Wafer Fab using 20-year-old technology which the Chinese already have access to.

When the sale was first announced last year it came under considerable scrutiny, given the vital importance to the economy that semiconductors play, being a critical component of most modern technologies, and in light of the supply chain concerns following the Chinese coronavirus crisis.

A whistleblower had also previously told CNBC that Newport Wafer Fab had received approximately £55 million ($75 million) in taxpayer funds and defence contracts for the development of next-generation tech, including £5.4 million to work on radar systems for fighter jets.

“I don’t think anybody realised that there were a couple of defence-related projects in there,” the whistleblower said at the time.

Nexperia, which is based in the Netherlands and has offices in Britain, is owned by JAC Capital, a subsidiary of JIC Capital, a Chinese state-owned investment firm. Nexperia claims to be run independently.

The firm only had to pay £63 million to take over ownership of the Welsh factory — a figure which Forrester analyst Glenn O’Donnell characterised last year as “minuscule”, explaining: “Most wafer fabs cost well over £1 billion. Even if this is older tech, this deal is ridiculously cheap.”

Communist China has reportedly been active in pursuing British tech, with the MI6 security service reportedly launching an investigation last year into leading British universities for pairing with Chinese weapons developers.

Chinese firms have also been keen on buying up large swaths of the British economy, reportedly spending at least £135 billion to buy ownership stakes in British companies, property, and infrastructure, such as Thames Water, Heathrow airport, and UK Power Networks.

The Communist Party-linked Jingye Group has also taken over ownership of British Steel, which produces one third of the United Kingdom’s domestic steel.

Responding to the government reportedly approving the sale of the semiconductor factory, the former leader of the Conservative Party and the founder of the Inter-Parliamentary Alliance on China, Sir Iain Duncan Smith, said that the move was “ridiculous”, noting that semiconductors are an industry that Beijing is seeking to gain “control over”.

“If the government goes down this road, it will become yet another step in the pathetic process of appeasing China who right now is supporting Russia and plans to pose a direct and deliberate threat to the West’s access to microchips and other key components for electronic equipment,” Sir Iain said.

The chairman of the Foreign Affairs Committee in the House of Commons, Tom Tugendhat, added: “It’s not clear why we haven’t used our new powers under the National Security and Investment Act to fully review the takeover of one of our leading compound semiconductor companies.”

“This is an area where China is sinking billions to compete. The government has no clear strategy to protect what’s left of our semiconductor industry.”

Follow Kurt Zindulka on Twitter here @KurtZindulka


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