Chinese buyer of Welsh chip maker warns investors’ deal is at risk

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The Chinese owner of Britain’s largest microchip maker has admitted for the first time that the deal could be scrapped as a national security review ordered by Boris Johnson is due within days.

Wingtech has warned shareholders in a Chinese dossier that “domestic and foreign industry policies” could put the Newport Wafer Fab takeover at risk, even though the sale of Wingtech-owned Nexperia has been confirmed in recent days.

It comes as Sir Stephen Lovegrove, the UK’s national security adviser, prepares to present a review of the deal that sources told The Telegraph had expected by the end of the month.

The government has come under increasing pressure to step in with the sale amid concerns about China’s ambitions in the semiconductor industry and amid a national shortage of chips used in electric cars and other electronics.

In a filing to the Shanghai Stock Exchange this week, Wingtech told investors that “the target company [Newport Wafer Fab] May be affected by domestic and foreign industry policies, [the] Economic environment and other factors in the business follow-up process.

It came when the £63m sale of South Wales Corporation, which makes the wafers on which semiconductor circuits are printed, was stamped with a rubber stamp. Filings at Companies House showed Newport Wafer Fab owners, including CEO Drew Nelson, transferred their shares to Nexperia, a Dutch semiconductor company owned by Wingtech, in July.

Although Sir Stephen’s review is expected soon, it could take months for the government to cancel the deal if it decides it is a national security risk. New legislation allowing it to block the takeover won’t take effect until January.

The deal raised concerns about the future of a promising microchip center in South Wales, centered around building an advanced ‘composite’ semiconductor, which was based on Newport Wafer Fab’s ‘open foundry’ model.

Andy Sellars of CSA Catapult, a publicly funded organization set up to support businesses in the region, said there is a “vibrant ecosystem in South Wales, which translates world-leading university research into commercial applications” and that “access to an open foundry is a critical step in the ecosystem.” “.

The Telegraph revealed last week that a consortium of tech companies was considering investing £300m in the company if the sale of Nexperia was blocked.

A spokesperson for the Henry Jackson Society, a national security think tank, said: “It was clear from the start that this deal threatened our national security and that the Secretary of Business needed to use his powers. The fact that the Chinese acquirer now recognized the danger the government might act is just a belated wake-up call. Reality on their side and on the side of the government.”

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