China is acquiring UK’s largest and last remaining advanced chip factory in England as global semiconductor shortage continues

While everyone is talking about the coronavirus pandemic, the semiconductor shortage is another global crisis that has been brewing for over six months now. Technology has permeated every facet of our lives. We now depend on semiconductors for almost everything we use. They are embedded in home appliances, smart devices, cars, among others.

Last Thursday, Ford announced it is cutting production at eight North American plants as the automaker grapples with a shortage of semiconductors — the chips inside every vehicle. While the United States is playing politics on how to address the shortage, China is taking a strategic approach. Just two years before the semiconductor shortage became news, China’s Wingtech Technology acquired Dutch firm Nexperia, a tech startup that started as a spinoff from Phillips, for $3.9 billion (about 25.2 billion yuan).

Now through the Chinese-owned Nexperia, China now wants to capture Europe’s semiconductor market with the acquisition of the UK’s largest microchip plant as semiconductor shortage spreads across the globe.

In an announcement that has prompted concerns about foreign powers owning key assets in the UK, the Chinese-owned Nexperia is now poised to take over Newport Wafer Fab, Britain’s largest microchip factory in a deal worth around £63 million ($87 million), according to a report from CNBC, citing two sources close to the deal who asked to remain anonymous because the information is not yet public.

Located in Newport, South Wales, Newport Wafer Fab is a privately-held chip plant that dates back to 1982. The plant is one of just a handful of semiconductor fabricators in the United Kingdom. The news about the acquisition has also sparked a national security row after UK lawmakers refused to intervene.

A Nexperia spokesperson told CNBC saying, “We are in constructive conversations with NWF and Welsh Government about the future of NWF. Until we have reached a conclusion we cannot further comment.”

In a letter to U.K. Business Minister Kwasi Kwarteng back in June, Tom Tugendhat, the leader of the U.K. government’s China Research Group and chairman of the Foreign Affairs Select Committee, said he was concerned about a potential takeover of the Newport Wafer Fab.

“I must stress again that having the U.K.’s leading 200mm silicon and semiconductor technology development and processing facility being taken over by a Chinese entity – in my view – represents a significant economic and national security concern,” – Tom Tugendhat, the leader of the U.K. government’s China Research Group and chairman of the Foreign Affairs Select Committee.

“I must stress again that having the U.K.’s leading 200mm silicon and semiconductor technology development and processing facility being taken over by a Chinese entity – in my view – represents a significant economic and national security concern,” Tugendhat said.

“This is the largest last remaining advanced semiconductor factory in England being sold to the Chinese and the British government aren’t doing s*** about it,” a source said, adding that they should at least try and get $1 billion for it.

A U.K. government spokesperson told CNBC: “We are aware of the expected takeover by Nexperia of Newport Wafer Fab. While we do not consider it appropriate to intervene at this time, we will continue to monitor the situation closely and will not hesitate to use our powers under the Enterprise Act should the situation change.”

Today, Taiwan dominates the foundry market with its contract manufacturers together accounted for more than 60% of total global foundry revenue 2020, according to data by Taipei-based research firm TrendForce.