Chip shortages are really hurting the semi-conductor market all over the world. GPU availability is becoming scarce and whatever stock comes out is grabbed by scalpers or miners. So prices are soaring right now. The situation is getting better but at a snail’s pace. In all this, Nexperia announces that they are going to acquire Newport Wafer Fab or NWF. NWF is UK’s largest chip producer as of right now.
Nexperia is owned by a Chinese company called Wingtech so basically, a Chinese company is all set to acquire one of the UK’s largest chip producers. Amidst the pandemic, amidst the ongoing chip shortage, UK is going to lose one of its largest chip producers. Some people won’t be happy with this. But it is good news for Nexperia as the acquisition will help them make more chips.
The news was previously leaked last Friday when two people told CNBC that an official deal would be announced this week and here it is. According to Achim Kempe, the chief operations officer at Nexperia “The Newport facility has a very skilled operational team and has a crucial role to play to ensure continuity of operations. We look forward to building a future together”. It isn’t all that surprising that this happened as Nexperia had become NWF’s second-largest shareholder back in 2019. But those were different times.
Increasing supply will benefit the market overall as the world is in dire need of more chips. I’m talking about the semi-conductor kind of chips. But selling a valuable UK asset to a Chinese company during a worldwide chip shortage that could last for 2-3 more years? how did that happen? Well, we aren’t the only ones asking that question. The leader of the UK government’s China Research Group, Tom Tugendhat, is also asking the same questions.
Tom is also the chairman of the Foreign Affairs Select Committee. He said that he was very surprised that the purchase is not being reviewed under the National Security and Investment Act. According to him “Having been in touch with partners in the US and around the world, I know I am not alone”. According to the Act, The Investment and Security Unit or ISU was formed that was tasked to guard National Security especially in cases of potential threats from share acquisitions and other deals, such as purchases of assets, including intellectual property or IP.
Tom further added that “The semiconductor industry sector falls under the scope of the legislation, the very purpose of which is to protect the nation’s technology companies from foreign takeovers when there is a material risk to economic and national security. When the UK signed the Carbis Bay G7 communique, we pledged to take steps to build economic resilience in critical global supply chains, such as semiconductors. This appears to be an immediate and very public reversal of that commitment”.