A state-backed Communist Chinese firm has conducted a hostile takeover of the UK’s largest microchip factory, raising concerns about Beijing’s growing control of the market during a global chip shortage.
On Monday, Dutch semiconductor manufacturer Nexperia, which is controlled by the China-owned electronics firm Wingtech, took 100 per cent control of the Newport Wafer Fab’s factory in South Wales after using a contractural clause to seize the company.
In 2019, Nexperia signed a contract to support the factory in exchange for Newport Wafer Fab putting up its factory as collateral. After the British company was unable to fulfil the manufacturing quota obligations in the deal, the Chinese owned enterprise was able to take full control of the factory, The Telegraph reported.
The Welsh firm, which produces silicon chips for the automotive industry and has been developing next-generation “compound semiconductors”, has been hard hit over the past year as the Chinese coronavirus crisis resulted in a global chip shortage. Nexperia has agreed to pay out £65 million to pay off Newport Wafer Fab’s debts in exchange for taking ownership.
Prior to the Chinese takeover, Newport Wafer Fab had called on the British government to step in and prevent the sale and to help find alternative funding sources. Yet, despite the concerns over national security, the Tory government did not intervene.
The move is reminiscent of China’s Belt and Road ‘debt-trap diplomacy’, in which the Communist nation offers predatory loans to developing nations throughout Asia, Africa, South America, and Eastern Europe for infrastructure projects — often built with Chinese labour and materials — and when the countries fail to repay the loans, the CCP seizes the assets.
Questions have been raised as to why the UK government did not use the recently enacted National Security and Investment Act to prevent the sale to the Chinese on national security grounds, as microchips and semiconductors have been highlighted by both the United States and the European Union as one of the key areas of concern in preventing Chinese technological dominance.
Speaking to Breitbart London, Hong Kong Watch chairman Benedict Rogers said: “This is yet another example of the naivety and lack of wisdom in our relations with the Chinese Communist Party regime and our failures to secure our critical industries and infrastructure.