UK orders sale of microchip factory by China's Nexperia, citing national security

LONDON (Reuters) -The British government on Wednesday ordered Chinese-owned technology company Nexperia to sell at least 86% of Britain's biggest microchip factory, Newport Wafer Fab, following a national security assessment.

The review of Nexperia's 2021 purchase of Newport Wafer Fab, now known as Nexperia Newport Limited, was announced earlier this year after legislation came into force in January allowing the government to scrutinise and potentially block acquisitions and investments in sensitive sectors.

It can be applied retrospectively to deals completed since November 2020.

"We welcome foreign trade and investment that supports growth and jobs. But where we identify a risk to national security we will act decisively," Business Minister Grant Shapps said on Twitter.

The government said there was a national security risk related to the technology and know-how which could result from compound semiconductor activities at the site, and the potential for those activities to undermine British capabilities.

The location of the site could also facilitate access to technological expertise in the South Wales area and prevent that area being engaged in future projects relevant to national security, the order said.

Nexperia, which is headquartered in the Netherlands, said it did not accept the national security concerns raised and that two previous security reviews had found no national security concerns that would give reason to block the acquisition.

"We are genuinely shocked. The decision is wrong, and we will appeal to overturn this divestment order," Nexperia's UK country manager, Toni Versluijs, said in a statement.

The government said Nexperia took its shareholding in Newport Wafer fab to 100% in July 2021 when it gained an additional 86% of the company's share capital.

"The Secretary of State considers that the final order is necessary and proportionate to mitigate the risk to national security," the order said.

(Reporting by Kylie MacLellan in LondonEditing by Jonathan Oatis and Matthew Lewis)