US and UK missile destroyers put out of action by microchips

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The Newport Wafer Fab factory, based in South Wales, could be forced to relocate if the handover to Chinese buyers is not overturned, a report has revealed. Nexperia, a subsidiary of Chinese technology company Wingtech, technically purchased the factory last year. But in January, Business Secretary Kwasi Kwarteng acquired the power to intervene in the sale, and he is reportedly still mulling over the decision.

Under the National Security and Investment Act, he may be able to block the sale on security grounds.

Researchers at the Policy Exchange think tank have warned Mr Kwarteng that if he fails to do so, Nexperia will likely seek to move the factory out of Britain.

The factory manufactures semiconductors, a crucial component of a wide range of electronic goods from smartphones to TVs and cars.

And amid a global semiconductor shortage, the think tank warned this might be part of China’s strategy to slash the need for semiconductor imports.

Policy Exchange researchers said: “There is a strong possibility that when Wingtech’s Shanghai plant reaches full capacity the company might close Newport and shift production to China, thus supporting China’s drive to reduce semiconductor imports.”

Mr Kwarteng, who launched a security review in March, had already come under intense pressure from MPs to block the sale.

Lord Alton, a crossbench peer, said back in April: “I have tabled a question in Parliament today asking why UK ministers have quietly approved this Chinese microchip factory takeover.

“As we have seen with telecoms and nuclear power it’s madness to sell vital UK interests to companies in hostile states.”

Iain Duncan Smith, the former leader of the Conservative Party, told Politico: “If the Government goes down this road, it will become yet another step in the pathetic process of appeasing China, who right now is supporting Russia and plans to pose a direct and deliberate threat to the West’s access to microchips and other key components for electronic equipment.”

Last year, Chinese President Xi Jinping appointed Lui He as the regime’s “chip tsar” to come up with a strategy to make China become self-reliant on microchips.

For two decades, China has been boosting its domestic semiconductor industry, but has struggled to make progress along the way.

It came after telecoms giant and chip designer Huawei and semiconductor manufacturer SMIC have been hit with sanctions, dealing a blow to China’s chip dreams, and meant that it had to boost imports from the US and elsewhere.

But Nexperia has downplayed the claims that it will move its Newport Wafer Fab’s production as “nonsense”.

A spokesman said: “This is complete nonsense. There is no factual basis for such idle conjecture.

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“In addition to acquiring the Newport Wafer Fab site, repaying a £17million loan to the Welsh Government, Nexperia has committed a further £160million of new investment to its UK business in the past year, to help respond to strong global demand for semiconductors.

“This investment has secured the 450 high-value manufacturing jobs at Newport, with a further 50 people hired already, as well as the 1,000 at our Manchester site.

“Those are not the actions of a business that is about to shut up shop.”
And while Mr Kwarteng launched a security review in May, Cabinet is reportedly split on the issue.

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