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A Chineseaided company is forced to sell its majority interest in a microchip factory Wales amid national security concerns as tensions between Beijing and the West continue to rise. Westminster told Nexperia on Wednesday evening to sell its stake in Newport Wafer Fab, the South Wales factory that focuses on microchips, also known as semiconductors. Microchips are used in all kinds of technological devices, from washing machines to smartphones, but also in the automotive industry. While Nexperia is a Netherlands-based company, it is a subsidiary of Shanghai-listed Wingtech, and it bought a controlling interest of 86 percent in the Welsh microplant in July 2021.
The order to sell its stake comes after an in-depth investigation, but Nexperia has vowed to challenge the decision it said was “appalled”. The company has also said it will immediately appeal the order issued by Company Secretary Grant Shapps under the National Security and Investment Act.
A government spokesman said: “Following a detailed assessment of national security, the Treasury Secretary has decided to issue a final order requiring Nexperia to sell at least 86 percent of Newport Wafer Fab to [mitigate] against potential national security risks.”
It comes after the government was previously urged to intervene by the House of Commons Foreign Affairs Committee, which argued that the takeover of Nexperia meant the sale of “one of the UK’s prized assets” to a strategic competitor and for two reasons could jeopardize national security.
The first was that Nexperia’s development of the Newport site could “undermine the UK’s capabilities” in semiconductor manufacturing. The warning came as the global chip industry ran short during the pandemic, leading to major supply chain problems. Meanwhile, China also has dominant control over the microchip market, something the West is trying to change.
A Chinese-backed company has been ordered to sell its stake in a British microchip factory (Image: Getty)
The Newport Wafer Fab plant produces microchips used in a range of technologies (Image: Getty)
The other security threat concerns the plant’s location in the Duffryn industrial estate semiconductor cluster, which “could facilitate access to technological expertise and know-how”. The government was warned that Chinese ties in Newport “could keep the cluster from becoming involved in future projects relevant to national security”.
The move also comes after US and UK security chiefs issued a joint speech calling for greater vigilance against the threat of Chinese infiltration of Western tech companies. MI5 Director General Ken McCallum FBI Director Chris Wray both warned the Chinese Communist Party’s “strategic plans” to overtake the West pose a serious risk to British businesses and research.
Mr McCallum said: “If you’re involved in advanced technology [such as] AI, advanced research or product development, chances are your know-how is material to the CCP. And if you have, or try for or [have] a presence in the Chinese market, you will get more attention than you may think. It has been described as “the largest wealth transfer in human history.” MI5 teams see the CCP working in multiple ways to benefit the UK.”
And while Prime Minister Rishi Sunak was chancellor, he helped pass the National Security Investment Bill to “protect ourselves from countries like China that try to infiltrate our businesses and steal our technology.”
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China has a firm grip on the microchip market (Image: Getty)
The National Security Investment Act allows the government to block investment in British companies that could jeopardize the country’s security. And at the G-20 meeting in Bali, Mr Sunak warned that Beijing poses a systemic challenge to British values and is the “biggest state-based threat to our economic security”.
He told reporters: “My view is that China poses a systemic challenge to our values and interests and poses the greatest state-based threat to our economic security. Incidentally, I think that this vision is very much in line with that of our allies.”
In addition to the perceived threat to economic security, there are also fears that China is capitalizing on the UK’s technological know-how, which has raised alarm among a number of politicians. Sir Iain Duncan Smith, the former leader of the Conservative Party, previously told Express.co.uk in an exclusive interview that China invests in British universities to “steal their technology” and “undermine them”.
He told Express.nl: “We need to stop the way they pour money into British universities and their vision is to get technology out of these universities. And also knowing that many of the future institutions will be drawn from these institutions, they try to undermine them. This is all part of the game and everything they do revolves around that.”
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Grant Shapps placed the order under the National Security and Investment Act (Image: Getty)
Sunak said China poses a systemic threat to British values (Image: Getty)
“And also knowing that many of the future institutions will be pulled from these institutions, they try to undermine them. This is all part of the game and everything they do revolves around that.”
But these tensions come at a time when relations between China and the West are rapidly deteriorating. Most troubling to the Western world is the fear that China will invade Taiwan, the island nation over which Beijing claims sovereignty.
While US-China relations have taken the brunt of the blow from rising tensions, Britain has also hinted to get involved. Former Prime Minister Liz Truss said over the summer that Western allies should learn lessons from Ukraine and increase support for Taiwan.
Mr Sunak said he agreed for Britain to send arms to the self-governing island, and argued that this option would be considered in a foreign and defense policy review.
He said: “We are reviewing all these policies as part of our revamp of the integrated review. Our policy towards Taiwan is clear that there should be no unilateral change of status and that there should be a peaceful resolution to that situation. We stand ready to support Taiwan as we do in resisting Chinese aggression.”