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November 8, 2023updated 09 Nov 2023 9:22am

Nexperia sells Newport Wafer Fab for $177m after national security probe

The UK's biggest chip plant is getting new owners after the government forced its sale on national security grounds.

By Matthew Gooding

Newport Wafer Fab, the UK’s largest semiconductor manufacturing plant, is being sold by current owner Nexperia to US company Vishay Intertechnology for $177m. Nexperia purchased the factory in 2021 but has been forced to part with it after the UK government intervened on national security grounds due to the company’s links to the Chinese government.

New owner Vishay plans to make MOSFETs at Newport Wafer Fab. (Photo by KenSoftTH/Shutterstock)

Vishay, which makes chips and components for power electronics, is purchasing the site after embarking on a $1.2bn programme to increase capacity. It already operates manufacturing facilities in the US, Europe, Israel and Asia, but this will be its first UK location. It says it plans to safeguard jobs at the factory, which employs 500 people in South Wales. Earlier this year, Nexperia announced plans to cut at least 100 of these jobs, citing the UK government’s opposition and difficult market conditions in the semiconductor sector.

How Vishay will integrate Newport Wafer Fab into its business

Founded in 1982, Newport Wafer Fab makes 200mm semiconductors, primarily for the automotive industry. Vishay plans to use the site for the production of MOSFETs, a type of transistor designed to handle large amounts of power.

Vishay is one of the world’s biggest producers of MOSFETs. Joel Smejkal, the company’s president and CEO, said: “By agreeing to acquire Newport Wafer Fab, our goal is to safeguard the positions of the highly skilled and dedicated employees and to invest the necessary capital to set up production for our SiC Trench MOSFETs and diodes.

“With its solid balance sheet and ample liquidity, Vishay will immediately bring stability and its reliable cash flow generation to ensure the facility becomes a fully operational and profitable fab”

He added: “For Vishay, acquiring Newport Wafer Fab brings together our capacity expansion plans for our customers in automotive and industrial end markets as well as the UK’s strategic goal of improved supply chain resilience.

“In addition to expanding capacity, we intend to collaborate with the Compound Semiconductor Cluster in South Wales and to join with key stakeholders committed to developing the semiconductor industry in the UK including university and community partners in the UK and particularly South Wales.”

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Smejkal said his company “looks forward to welcoming Newport Wafer Fab’s employees into Vishay, and to partnering with local authorities and the Welsh and UK Governments to both ensure long-term growth for the fab and deliver value to our customers and stockholders”.

Why Nexperia is parting with Newport Wafer Fab

News of the sale of Newport Wafer Fab, which is set to close in the first quarter of next year, brings to an end two years of ownership by Nexperia, which has been marked by controversy.

Though headquartered in the Netherlands, the company is owned by Chinese company Wingtech. When the 2021 take-over was announced, it caused consternation among Tory MPs, who said a Chinese-owned company purchasing what could be seen as a national strategic asset would pose a security risk.

After initially appearing to shy from intervening in the deal, then Prime Minister Boris Johnson eventually launched an investigation under the National Security and Investment Act. This came to a head last November when then Business Secretary Grant Shapps issued a ruling ordering Nexperia to sell at least 86% of its holding in the site.

The company, which already operates a chip plant in Manchester, said at the time that it was shocked by the decision and planned to appeal, but seems to have had a change of heart. The deal with Vishay appears a financially favourable one for Nexperia, which reportedly paid £63m ($77.4m) for the site in 2021 while also taking on debts of £38m ($46m).

Toni Versluijs, UK manager at Nexperia, said the company “would have preferred to continue the long-term strategy it implemented when it acquired the investment-starved Fab in 2021 and provided for massive investments in equipment and personnel”, but he said this plan has “been cut short by the unexpected and wrongful divestment order made by the UK government”.

Versluijs said staff at the plant needed “clarity about its future to avoid further losses” and that “today’s announcement provides this”.

He added: “Of all options, this agreement with Vishay is the most viable one to secure the future of the site as Vishay – like Nexperia – has a solid customer base for the Fab’s capabilities.

“For the site, Vishay’s commitment to further make the Newport Wafer Fab a success story is encouraging. Nexperia’s position with regards to the UK government’s order
remains unchanged.”

The deal means the UK’s biggest chip plant will remain in foreign ownership. The government launched its long-awaited UK semiconductor strategy earlier this year, promising a £1bn investment in the industry over the next decade. But much of this money will go into R&D and chip design, rather than manufacturing. It is hoped the Newport site can be at the centre of a South Wales semiconductor cluster that will develop next-generation compound semiconductors, made of silicon and other materials such as gallium nitride, which can boost performance.

Read more: Why Whitehall snubbing Nexperia over Newport Wafer Fab is short-sighted

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