Get the latest news straight to your inbox.
Register for the Telecoms.com newsletter here.
May 27, 2022
After dragging its feet for nearly a year, the UK government has launched a national security investigation into China-backed Nexperia’s acquisition of Newport Wafer Fab.
“We welcome overseas investment, but it must not threaten Britain’s national security,” tweeted Business Secretary Kwasi Kwarteng on Wednesday.
The probe will take 30 working days to complete, although the government can extend it by another 45 days if needed. Depending on the outcome of its assessment, the government has the power under the National Security and Investment Act to unwind the deal.
The eyebrow-raising could not have been more widespread and fulsome when news of the Newport Wafer acquisition broke last July. While Nexperia is based in the Netherlands, its parent is most definitely not. Component maker Wingtech, which acquired Nexperia in 2016, is based in Huangshi, China, just down the road from Wuhan, as it happens.
Days after the deal was announced, Prime Minister Boris Johnson told a Parliament Liaison Committee he had instructed National Security Advisor Stephen Lovegrove to carry out a review of the deal.
As the world knows by now, the gulf between what Johnson says and what actually happens in reality can be measured in parsecs, and by April this year news reports were questioning whether it had really been looked into at all. Given that a formal investigation has only just been announced, it suggests that Lovegrove either took his sweet time, or was busy doing literally anything else.
It is difficult to say with certainty what the outcome of the investigation might be, but there’s nothing to stop a bit of speculation.
When the National Security and Investment Act came into force at the beginning of the year, it was noted that it can be applied retroactively as far back as November 2020 in cases in which false or misleading information was provided. If the investigation concludes that Nexperia wasn’t being completely clear about who its owner is, then that might be grounds to reverse the Newport Wafer deal.
Alternatively, in the absence of any false or misleading information, the investigators might conclude that permitting the sale of the country’s biggest chip maker to any foreign entity – Chinese or otherwise – would undermine national interests. Indeed, while it is widely-known that Newport Wafer doesn’t produce so-called ‘strategically significant’ semiconductors – like those used in comms networks or weapon systems – it is nonetheless an important part of the country’s industrial and manufacturing base operating in what is currently considered of the most critically-important sectors of the global economy.
Ultimately, even if there is no strong case against permitting the takeover, political pressure alone might be enough to put the stoppers on it.
Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.
You May Also Like