Sale of Microchip Factory to China Was Not Investigated as Promised, Claim UK Lawmakers

An employee makes chips at a factory of Jiejie Semiconductor Company in Nantong, in easter
STR/AFP via Getty Images
Kurt Zindulka

The sale of Britain’s largest semiconductor factory to a firm controlled by the Chinese Communist Party has not properly been investigated by the government despite promises from Prime Minister Boris Johnson, the Foreign Affairs Committee has claimed.

Following the takeover of Newport Wafer Fab last year by Chinese-owned Nexperia after the factory failed to meet its debt obligations, Prime Minister Boris Johnson vowed that the National Security Adviser would investigate the matter.

However, a report from the Foreign Affairs Committee on Tuesday said that they have not seen any evidence of such a review ever taking place and that they had “no choice” but to assume that one has not been started.

While the government has said that has not made a decision on giving the final approval for the sale, a report last week from POLITICO claimed that National Security Advisor Stephen Lovegrove found that transferring ownership of the crucial plant did not represent a threat to the nation’s national security.

The Foreign Affairs Committee disagreed with such a sentiment, saying that given the importance of semiconductors to the modern economy, the sale of the factory to Communist China should “cause concern” particularly in light of the global microchip shortage in the wake of the Wuhan coronavirus.

“We argued that it is crucial that the Government gets the new investment screening regime right from the beginning—both to ensure that our national security is protected and that we remain firmly open to valuable foreign investment,” the committee said.

According to the BBC, Foreign Affairs chairman Tom Tugendhat said:  “Semiconductors are essential to every aspect of modern life and Newport Wafer Fab is one of the country’s leading manufacturers.

“Their takeover by Nexperia left many wondering why we are, seemingly, handing over critical security infrastructure to overseas companies with well-documented links to the Chinese state.

“The long-term security of our nation relies not just on our Armed Forces but on the resilience of our economy and that means ensuring our future stability is never sacrificed for the sake of short-term advancement.”

The former leader of the Conservative Party and founder of the Interpaliamentary Alliance on China, Sir Iain Duncan Smith said on Monday: “We must take back control of our strategic industries from China. The short-sighted sales of critical manufacturing infrastructure will leave us completely dependent on Beijing.”

Under the National Security and Investment Act, which came into effect in January, the government has the ability to shut down the sale of Newport Wafer Fab to Nexperia on grounds of national security, given its connections to Beijing.

Though Nexperia’s headquarters are located in the Netherlands, the firm is owned by the Shanghai-listed Wingtech Technologies, which according to Chinese financial analysis company Datenna is heavily incorporated with the communist state.

On top of concerns about the supply of semiconductors, the Welsh factory was also reported to have received around £55 million ($75 million) from the British government in order to work on next-gen defence projects, including radar systems for fighter jets.

Besides the attempted takeover of Newport Wafer Fab, Chinese firms have been steadily buying up critical infrastructure in Britain, spending at least £135 billion to buy ownership stakes in Thames Water, Heathrow airport, and UK Power Networks.

Last year, British Steel — which produces one-third of the domestic steel supply — was also taken over by the Communist Party-tied Jingye Group.

Follow Kurt Zindulka on Twitter here @KurtZindulka

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