UK government acquires US-owned Coherent semiconductor factory for $27M to secure supply for military

The British government has acquired a struggling semiconductor factory from U.S.-based firm Coherent for £20 million ($27 million). The move aims to ensure the domestic production of gallium arsenide semiconductors, essential components for military technologies, including fighter jets.

In an announcement on Friday, the UK government revealed the factory in Newton Aycliffe, which will now be called Octric Semiconductors UK, is the country’s only domestic source for these specialized semiconductors.

The acquisition is expected to strengthen the vital supply chain needed for the UK’s Armed Forces, safeguard the future of this crucial facility, and preserve up to 100 skilled jobs in the North East.

In a news release, UK Defense Secretary John Healey said:

“Semiconductors are at the forefront of the technology we rely upon today, and will be crucial in securing our military’s capabilities for tomorrow. This acquisition is a clear signal that our government will back British defense production. We’ll protect and grow our UK Defence supply chain, supporting North East jobs, safeguarding crucial tech for our Armed Forces, and boosting our national security.”

The purchase is part of the government’s broader effort to safeguard and expand the UK’s defense capabilities and export potential, with plans to invest in the facility’s future.

Over the coming years, the government plans to invest in this facility to enhance the UK’s defense industrial capacity and boost exports. It’s a notable shift, as British governments typically don’t purchase or operate companies, but the semiconductor sector has gained attention due to its significance in both the economy and national security.

Though it’s rare for the UK government to take ownership of companies, the semiconductor sector has become a focal point due to its critical role in national security and the economy. The Newton Aycliffe plant had faced challenges in the past year, particularly after losing key contracts, including a supply deal with Apple, Reuters reported.

In May, the Daily Telegraph also confirmed Reuters’ report that the wafer fab in Newton Aycliffe was at risk of being sold or shut down after Apple ended a supply agreement, raising concerns about its potential sale or closure.

Meanwhile, this isn’t the first time the government has stepped in to protect a semiconductor facility. Three years ago, it acquired Newport Wafer Fab to prevent its sale to a Chinese-owned Dutch firm.

In its statement, the government emphasized the strategic importance of semiconductors, calling them vital to both the UK’s growth and clean energy goals.