Kwasi Kwarteng has ordered a detailed security review of the Chinese-backed takeover of Britain’s largest microchip plant in the clearest sign so far that the deal will be blocked.
The business secretary demanded the sale of Newport Wafer Fab to Nexperia under new legislation, which entitles him to intervene for national security reasons.
Mr Quarteng rejected the advice of two security investigations to order the review amid growing pressure from Tory supporters that the deal risks jeopardizing Britain’s interests.
Nexperia’s parent company is Wingtech, a Shanghai-based state-owned technology company.
The deal was completed last summer, and Mr Quarteng had until July to call it before his powers to block it expired.
He said: “Today I called for the acquisition of Newport Wafer Fab by Nexperia, a subsidiary of a Chinese company.
“Now there will be a full assessment of the new Law on National Security and Investment. We welcome investment abroad, but it must not jeopardize Britain’s national security.
Tom Tugendhat, chairman of the Foreign Affairs Committee, which is campaigning to block the deal, said: “We need to maintain a foundation on which to build to ensure the sustainability of the United Kingdom. It’s not just about security today, it’s about independence tomorrow. “
According to the review, the government’s inspection department has 30 working days to investigate the effects of the national security deal, which could be extended by another 45 days. Mr Quarteng then decided whether to block the takeover.
Newport Wafer Fab is the largest chip factory in the UK, producing power electronics components vital in areas such as electric cars. It is also seen as a key part of a cluster of companies investing in high-tech composite semiconductors in the region.
The company was bought by Nexperia last year after falling into financial difficulties. Nexperia insisted it was a Dutch company and not influenced by the Chinese state. He says he has invested £ 80 million in the factory and hired staff.
Two security checks on the deal, most recently by National Security Adviser Sir Stephen Lovegrove, did not raise serious concerns about the deal, and Boris Johnson said he did not want to block all Chinese investment in Britain.
However, the deal was opposed in the United States, where members of Congress wrote to Joe Biden about it. Tony Abbott, a former Australian prime minister and Johnson’s trade adviser, said he expected the deal to be blocked.
This came as MEPs launched an investigation into Britain’s chipmaking concerns as concerns about access to and supply of vital components grew.
The use of semiconductors in weapons means that the United Kingdom must view access to them as a “matter of national security”, according to Parliament’s Committee on Business, Energy and Industrial Strategy.
Commission Chairman Darren Jones said: “Semiconductors are growing in technological and geopolitical importance. With scarce global supply, it is essential to assess the UK’s capacity and what the government can do to increase it. “
If the deal is blocked, the plant is likely to need alternative private investment. Ron Black, the former CEO of the British chip company Imagination Technologies, said he could lead a consortium investing in the facility.
Nexperia did not respond to requests for comment.
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