Chinese Takeover of UK’s Nexperia Blocked On National Security Grounds
November 17, 2022
Nexperia, headquartered in The Netherlands, is shocked by the UK Government’s
decision to order the divestment of 86% of its semiconductor wafer factory in
South Wales, known as Newport Wafer Fab (NWF), despite the acquisition being
cleared by two previous security reviews. Nexperia does not accept the national
security concerns raised. The far-reaching remedies which Nexperia offered to
fully address the Government’s concerns have been entirely ignored.
The UK Government chose not to enter into a meaningful dialogue with Nexperia or
even visit the Newport site. More than 500 employees in Newport also raised
their own significant concerns about such a divestment – the Government has
chosen not to listen to them and instead taken this decision which puts the
livelihoods of them and their families, as well as more than £100m of taxpayers'
money, completely unnecessarily at risk. Nexperia will now challenge the order
and will do everything possible to keep the factory and protect its employees in
South Wales.
On 25 May 2022, Nexperia learned from public media reports that the UK
Government’s Secretary of State for Business, Energy and Industrial Strategy (BEIS)
was exercising his statutory power to retroactively “call in” our acquisition of
NWF, announced in July last year.
The Secretary of State exercised this power under the new National Security and
Investment Act (which became effective in January 2022), after previous reviews
by BEIS and the UK’s National Security Advisor, both of which found no
substantive national security concerns that should give cause to block the
acquisition.
Nexperia has now been notified by the Secretary of State that, despite the two
previous reviews and our proposals, he now requires the divestment of 86% of
Nexperia Newport.
Nexperia does not accept the potential national security concerns raised. The
Company proposed far-reaching remedies to BEIS’s Investment Security Unit that
fully address even these potential concerns. Nexperia offered, amongst others,
not to conduct the compound semiconductor activities of potential concern and to
provide the UK Government with direct control and participation in the
management of Newport. There has been no dialogue between the Government and
Nexperia on these proposals. The Government has not visited Newport, has not
spoken with the over 500 employees whose jobs are now at risk, and none of the
three responsible Secretaries of State have responded to Nexperia's requests for
dialogue.
Responding to the decision on behalf of Nexperia, UK Country Manager, Toni
Versluijs, said:
“We are genuinely shocked. The decision is wrong, and we will appeal to overturn
this divestment order to protect the over 500 jobs at Newport. This decision
sends a clear signal that the UK is closed for business. The UK is not Levelling
Up but Levelling Down communities like South Wales.
“The decision is wrong – in many aspects. It is legally wrong – being
disproportionate given the remedies Nexperia has proposed. It is wrong for the
employees of Nexperia Newport– creating further uncertainty. It is wrong for the
UK semiconductor industry – taking out a strong player. It is wrong for the UK
economy – undermining its semiconductor industry as we brought new production to
Newport. It is wrong for the UK taxpayer – who could now be faced with a bill of
over £100 million for the fallout from this decision.
“We will appeal this wholly incorrect decision. We are hugely disappointed by
this extraordinary U-turn, and the greater uncertainty that it creates for our
employees and their families in Wales whilst also not recognising the commitment
of our 1,000 employees in Manchester. As a globally successful European-centred
company, with our roots at Royal Dutch Philips and proud, 90-year track record
in Britain, it is astonishing that our employees face such jeopardy and hundreds
of millions of pounds of foreign direct investment are not welcome.
“We
rescued an investment-starved company from collapse. We have repaid taxpayer
loans, secured jobs, wages, bonuses and pensions, and agreed to spend more than
£80m on equipment upgrades since early 2021. Those who sold the business to us
agreed that it was the only viable solution, and the deal was publicly welcomed
by the Welsh Government.
“Quite apart from the apparent concerns raised by various parties, which we have
been keen to address openly, we have been shocked by the Government’s process
and its refusal to have a meaningful dialogue to discuss our proposals for a
mutually positive solution. We made every effort to engage, to explain our
business and made bold proposals for our operations in Newport and its
management to nullify any potential fears about possible national security
risks. We have been especially disappointed that we were denied the opportunity
to discuss these with the Secretary of State himself or any of his political or
Private Office team.”
Nexperia will prioritise looking after the impacted employees at Nexperia
Newport and reducing the negative impact on its customers.
