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The sale of Britain’s largest microchip factory to a Chinese company is to be reviewed by the UK government.

Business Secretary Kwasi Kwarteng will make a national security assessment of the takeover of Newport’s Wafer Fab by Nexperia.

It could force the company to reduce its shareholding back to the 14% it originally owned.

MPs have previously criticised the UK government over the case.

A report in April said an investigation pledged by the Prime Minister Boris Johnson by the National Security Advisor had not happened.

Newport Wafer Fab, based near the estate of Duffryn in the west of the city, runs the UK’s biggest microchip company and employs around 450 people.

On Wednesday Mr Kwarteng announced there would be a “full assessment” of the acquisition under the National Security and Investment Act.

“We welcome overseas investment, but it must not threaten Britain’s national security,” he said on Twitter.

Prime Minister Boris Johnson said last year he did not want to drive Chinese investment away from Britain because of “anti-China spirit”.

The government, which has the power to intervene, including retrospectively, in acquisitions on national security grounds, has 30 working days to carry out its assessment.

The deal is under scrutiny amid an ongoing global shortage of computer chips which has been exacerbated by the pandemic.

Their importance to modern manufacturing means they are regarded as an increasingly important strategic asset.