UK government delays decision on purchase of semiconductor plant

The British government has delayed the decision on whether or not the UK's largest semiconductor producer can be bought by a Chinese manufacturer by another month and a half.

The business secretary, Kwasi Kwarteng, had been expected to make a decision by Tuesday on the purchase of Newport Wafer Fab by Nexperia, a Dutch firm that is owned by China's Wingtech.

Kwarteng asked for extra 45 days to look at the controversial 63 m deal in a move first reported by the Financial Times.

In late May, he launched an inquiry into the potential takeover of the manufacturer under the new National Security and Investment Act, which was introduced at the beginning of the year.

The business secretary had 30 days to make a decision, with the option of extending the time for a further 45 days. After that period, he can block the deal, demand remedies or allow it to go ahead.

Nexperia, which is looking to acquire Newport Wafer Fab, is based in the Netherlands but is a subsidiary of China's partially state-backed Wingtech.

A deal for the UK firm is particularly sensitive because it has multiple contracts with the UK government, including defence related projects.

Most of the world's semiconductors are produced in factories in Taiwan and South Korea, although the industry has risen in geopolitical prominence as China has set about asserting itself on the world stage under its president Xi Jinping.

Large production delays have been caused by the pandemic, as well as large production delays for carmakers in the UK and beyond, as well as technology companies and other manufacturers.

Semiconductor producers in countries like the US and Japan, and the EU, have been investing heavily in expansion of their facilities.

On Tuesday, the UK boss of Nexperia told the business, energy and industrial strategy BEIS committee, which is holding an inquiry into the UK semiconductor industry that the government's delay in reaching a decision on the deal has cause impatience among customers, investors and employees.

Toni Versluijs told MPs that the company had no plans to move operations abroad if its acquisition of Newport Wafer Fab is allowed to proceed.