Kwasi Kwarteng has ordered a detailed review of the security of the takeover of the largest microchip plant in the United Kingdom, with the support of China, in the clearest signal that the deal will be blocked.
The business secretary has called for the sale of Newport Wafer Fab to Nexperia under new legislation that empowers it to intervene for national security reasons.
Kwarteng has overturned the advice of two security inquiries to order the review amid growing pressure from conservative backbenchers that the deal could threaten British interests.
Nexperia’s parent company is Wingtech, a Shanghai-based state-owned technology company.
The deal was completed last summer and Kwarteng had a deadline in early July to ask for it before his power to block it expired.
He said: “Today, I have announced the acquisition of Newport Wafer Fab by Nexperia, a subsidiary of a Chinese company.
“There will now be a full assessment under the new National Security and Investment Act. We welcome investment abroad, but it should not threaten British national security.”
Tom Tugendhat, chairman of the Foreign Affairs Committee that campaigned for the deal to be blocked, said: “We need to maintain a foundation to build on to ensure that the UK is resilient. It’s not just about security today. but tomorrow’s independence. “
Under review, a government control unit has 30 business days to investigate the implications of the national security agreement, which could be extended for another 45 days. Kwarteng then decides whether to block the acquisition.
Newport Wafer Fab is Britain’s largest chip plant by volume, producing components for vital power electronics in areas such as electric cars. It is also considered a key part of a cluster of companies investing in high-tech composite semiconductors in the area.
The company was bought by Nexperia last year after it ran into financial difficulties. Nexperia has insisted that it is a Dutch company and is not influenced by the Chinese state. He says he has invested £ 80 million in the factory and has hired staff.
Two security reviews of the deal, most recently by National Security Adviser Sir Stephen Lovegrove, have raised no major concerns about the deal, and Boris Johnson has said he does not want to block all Chinese investment in the UK.
However, the deal has been opposed in the United States, where members of Congress have written to Joe Biden about it. Tony Abbott, Johnson’s former Australian prime minister and trade adviser, said he hoped the deal would be blocked.
It came as MPs launched an inquiry into Britain’s chip-making capabilities as concerns about access to supplies of vital components and their use in armaments grew.
The use of semiconductors in weapons means that the UK should consider access to them as “a matter of national security”, according to Parliament’s Business, Energy and Industrial Strategy Committee.
Committee Chairman Darren Jones said: “Semiconductors are growing in technological and geopolitical importance. With scarcity of global supply, it is essential that we take stock of the UK’s capacity and what the government can do to increase it. the”.
If the deal is blocked, the plant is likely to need an alternative private investment. Ron Black, the former CEO of British chip company Imagination Technologies, has said he could lead a consortium to invest in the facility.
Nexperia did not respond to requests for comment.