The Chinese-backed owner of Britain’s biggest microchip plant has claimed the facility could shut down if the UK Government successfully blocks its takeover. Nexperia claims Newport Wafer Fab, which employs around 500 staff, would face losses of £170m a year and would become unviable if it is forced to sell the facility.
The Telegraph reports that the UK Government has ordered Nexperia, which is headquartered in the Netherlands but owned by China's Wingtech, to sell the plant on national security grounds. The company took over the site, located on Cardiff Road in Duffryn, in 2021.
Nexperia has mounted a legal challenge to the government's decision, warning it could lead to hundreds of job losses and threaten Newport's economic future. The company has enlisted Lord Pannick, who represented Boris Johnson in his Partygate defence, to fight its case.
Nexperia said a divestment order “would have a devastating impact on Newport’s financial position”, according to High Court legal filings. "Newport would be left with only a single remaining client, and no immediate pathway to return to profitability,” it said. “Nexperia’s forecasting in this scenario projects a cash flow deficit of more than £170m by the end of 2024.
“In the short-term, the plant would require significant capital backing in order to remain solvent during the transition... there is the potential for a staff exodus that would cripple Newport’s production capacity, threatening Newport’s viability as a feasible business.
“For both prospective customers, as well as potential alternative owners of the Newport facility, such a turn of events would decimate Newport’s value proposition even in the event that a viable alternate buyer and customers could be found.”
Newport Wafer Fab has faced an uncertain future since it saw its production impacted by the coronavirus pandemic. It reportedly made a £13m loss in 2020 before being taken over by Nexperia in July 2021. In November Grant Shapps, the former business secretary, told Nexperia to sell its 86% share of Newport Wafer Fab following a “detailed national security assessment." The government said it feared the firm could restart work on cutting-edge compound semiconductors, which “could contribute to undermining UK capabilities”
But Nexperia says the decision could result in job losses and has launched a judicial review, which will be heard in the coming weeks. The company told the court that its chips are instead “generally for use in household appliances like kettles and toasters”. A spokesperson said: “Nexperia applied for a Judicial Review earlier this year. Whilst we await the court’s hearing and decision in the coming months, Nexperia continues to focus on protecting the interests of its UK employees and delivering for its customers.”
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