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TAIPEI – China’s largest smartphone assembler, Wingtech Technology, is purchasing the UK’s largest chip factory in a bid to secure additional capacity amid a global semiconductor supply crisis.
The purchase of the Wales-based Newport Wafer Fab, however, could invite the UK government to come under scrutiny as countries around the world prioritize domestic chipmaking as a matter of national security.
Wingtech said it agreed to buy the loss-making Welsh facility from its owner, Neptune 6, which makes automotive-grade semiconductors, in a stock exchange filing late Monday night. Shares of the Chinese company jumped more than 5% at one point in Tuesday morning trading in Shanghai, but then fell 2% below their opening price.
“Details of the deal are still being worked out and ownership has yet to be transferred. There are still uncertainties,” Wingtech said in its swap brief. The price of the purchase was not disclosed, although U.S. financial news channel CNBC cited sources as saying the deal would be worth £ 63m ($ 87m).
The acquisition will be made through Nexperia, a chipmaker that Wingtech bought in 2019 from the Chinese fund JAC Capital. JAC bought the Dutch company from chipmaker NXP for $ 2.75 billion in 2016, the biggest chip acquisition deal in China at that time.
The deal could help China secure more automotive semiconductors amid a global chip shortage and further strengthen its chip supply chain. It could also help China gain more access to semiconductors at a time when the United States has blacklisted the country’s largest contract chipmaker Semiconductor Manufacturing International Co. Washington says the minimum wage has links military, which the company has repeatedly denied.
Newport Wafer Fab counts Nexperia, STMicroelectronics, Samsung, Motorola and other chip developers among its customers, according to the company. The chipmaker reported a net loss of 18.61 million pounds ($ 25.6 million) for 2020 on revenue of 30.91 million pounds, according to the Wingtech filing. By comparison, the Chinese tech firm’s revenue rose more than 24 percent to 51.7 billion yuan ($ 8 billion) in 2020.
Nexperia, 100% owned by Wingtech, is China’s largest automotive chip maker and aims to compete with world leaders Infineon and NXP. It recently opened a 12 billion yuan chip factory in Shanghai that is expected to start production next year with an annual capacity of 400,000 wafers, a significant expansion in China’s auto chip capacity.
Nexperia has also opened research and development centers in Penang, Malaysia and Shanghai, and this year is expanding its R&D facilities to Hong Kong, Hamburg, Germany and Manchester, UK, according to the company.
Wingtech, founded in 2006 by Zhang, a former engineer at STMicroelectronics, is a growing Chinese technology company that has aggressively grown throughout the supply chain in recent years. In addition to tapping into semiconductors through its purchase of Nexperia, Wingtech this year bought the factories of Chinese smartphone camera module maker O-Film Tech after the latter was blacklisted by Washington and removed from the list. Apple’s supply chain for its alleged use of forced labor involving China’s Uyghur Muslim minority. . Chinese home appliance manufacturing giant Gree and the government-backed Hefei Core Screen Industry Investment Fund are also Wingtech stakeholders.
There is, however, some resistance to the deal in the UK. Tom Tugendhat, chairman of the UK’s foreign affairs select committee, said in mid-June, while the buyout was still under discussion, that the sale of Newport Wafer Fab should be subject to review under the law on national security and investment.
“I have to stress again that the fact that the UK’s main 200mm silicon and semiconductor technology development and processing facility is taken over by a Chinese entity, in my opinion, represents a safety concern. economic and national important, ”Tugendhat said in a letter to the Secretary of State for Business. He reiterated his concerns about the sale in comments to CNBC on Monday.
Others questioned the feasibility of the acquisition. Donnie Teng, a technical analyst at Nomura Securities who has followed Wingtech for years, said it could be difficult for the company to manage its many new acquisitions while growing its own chip production facility in a short period of time.
“On the surface, it is a victory for China to secure the supply of more semiconductor components. However, Wingtech is still a newcomer in terms of operating semiconductor companies, which is hugely different from assembling consumer electronics, ”Teng told Nikkei Asia. “The UK chip factory is also suffering from low efficiency and it remains to be seen whether the new owner will be able to retain workers who know how to run chip factories.”
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