Chinese company behind purchase of UK’s largest chip factory warns deal is under threat

The Chinese company behind the purchase of Britain’s largest chipmaking plant at the start of the summer admitted the acquisition could be rolled back as the UK government reviews the takeover.

Shanghai Headquarters Wing technologies warned shareholders of a note this week that “domestic and foreign industrial policies” pose a risk to the takeover of Newport Wafer Fab, which is located in South Wales. The news was first reported by The Telegraph newspaper.

The warning comes after British Prime Minister Boris Johnson ordered Stephen Lovegrove, the UK’s national security adviser, to investigate the deal. A decision could be announced in the coming days.

Wingtech acquired Newport Wafer Fab for around £ 63million via a Dutch subsidiary it owns called Nexperia. The deal was announced in July and the terms of the deal have now been confirmed, according to Wingtech’s statement filed on the Shanghai Stock Exchange.

However, a spokesperson for the UK government told CNBC that the deal is still under review. “We have examined this matter thoroughly and will continue to monitor the situation closely,” the spokesperson said. Wingtech did not immediately respond to a request for comment from CNBC.

Wingtech is a publicly traded manufacturing company that assembles smartphones and other consumer electronics. However, in recent years, the company has grown increasingly interested in semiconductors. With around 20,000 employees and a market value of around $ 18 billion, it is one of several companies in China to be supported by the Chinese government.

Located on a 28 acre site, Newport Wafer Fab employs approximately 400 people and produces approximately 8,000 wafers per week. Wafers are thin pieces of silicon on which circuit patterns are printed to build chips. The 200mm pads from the factory are widely used in the automotive industry, which has been particularly affected by a global chip shortage.

A the consortium is preparing to tender for Newport Wafer Fab if the government decides to try to unwind the deal. It Includes semiconductor mogul Ron Black, who led Imagination Technologies until it was acquired by a Chinese company.

UK lawmakers fear the UK will sell some of its top semiconductor companies to overseas buyers amid the global chip shortage.

Semiconductors are found today in everything from missile systems to vacuum cleaners and toothbrushes; they are a staple in today’s technology-driven economies and China aspires to be a world leader.

The UK government is also in the process of deciding whether or not to approve the sale of Cambridge-based chip designer Arm, which is currently owned by SoftBank, to US chip giant Nvidia.

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