The British government has effectively blocked the sale of the country's largest chip plant, Newport Wafer Fab, to the Dutch company Nexperia, owned by the Chinese state, over fears that it would jeopardize the national security of the United Kingdom.

UK Secretary of State for Business, Energy and Industrial Strategy Grant Shapps has ordered Netherlands-based Nexperia to sell a majority stake in Wales-based Newport Wafer Fab, which it acquired for $75 million. This is because Nexperia is partly owned by China and its shares are traded on the stock exchange in Shanghai. Nexperia closed the deal in 2021, changing the name of the company that owns the UK plant to Nexperia Newport Limited or NNL.

The order obliges Nexperia to sell at least 86% of its stake in NNL "during a specified period" in a "specified process." It is known that initially Nexperia owned only 14% of Newport Wafer Fab, but in July 2021 it took over 100% of the shares. Justifying his order, Shapps said the country welcomed international trade and foreign investment, "but where we identify a national security risk, we will act decisively."

According to a Nexperia spokesman, the authorities made the wrong decision and the company intends to appeal the order to dispose of assets in order to protect more than 500 jobs at Newport Wafer Fab.

Government officials and British MPs have repeatedly expressed concern that the UK is selling a valuable asset to a Chinese-owned business at a time of global semiconductor shortages that still persist in some segments and, according to experts, will last until 2024.

An investigation into the Nexperia deal was initiated by British authorities earlier this year and the deal is regularly reassessed as the country intends to use its powers to block foreign business purchases of companies or foreign investment in sensitive sectors of the economy.

British government officials said yesterday that the purchase of the Newport plant poses a national security problem. While Newport Wafer Fab is actually relatively small, it owns the UK's largest chip manufacturing facility, capable of processing 32,000 silicon wafers a month. Recently, governments have been actively trying to regain control of strategically important industries such as semiconductors after numerous disruptions demonstrated the vulnerability of supply chains.

The latest decision could seriously complicate British-Chinese relations, which have already been in a bad state of late after London's actions to ban Huawei 5G equipment and issue special visas to Hong Kong residents, ultimately allowing them to claim British citizenship.

However, the pressure is not only applied to companies with Chinese participation. Earlier in the UK, the possible takeover of the American NVIDIA company Arm was investigated, also in connection with a possible threat to national security. As a result, the company delayed the purchase of a well-known chip architect back in February.