Nexperia Newport, which have been ordered by the UK Government to sell its microchip facility in South Wales on national interest and security grounds, have appointed US advisory firm ATREG to advise on a possible sale of the facility.
After a protracted review of the acquisition of was previous known as Newport Wafer Fab, the UK Government last year ruled that Amsterdam-based Nexperia - which is owned by Chinese and Shanghai-listed tech company Wingtech - divest at least a 86% stake in the business. The UK Government used the National Security and Investment Act for its ruling.
Nexperia said at the time it would seek to overturn the decision via a judicial review, a process that it is still committed to after strongly rejecting the national security concerns of the UK Government.
In a statement Nexperia said: “Whilst we await the outcome of the judicial review process, Nexperia has appointed advisers (ATREG) explore the potential future sale of its Newport manufacturing site. Our priorities remain unchanged – to look after the impacted employees at Nexperia Newport and to secure the supply for our customers. This appointment has been made with those priorities in mind. Nexperia remains fully committed to the judicial review process and still strongly disagrees with the UK Government’s November 2022 divestment order, not accepting any of the national security concerns raised.”
Nexperia, having previously held a minority 14% shareholding in the facility which employs 600, were able to take total ownership of the plant in 2021 having evoked a clause in the event of the facility being unable to meet customer orders. It acquired the business for just £63m from a company called Neptune Six.
Neptune Six, under this chief executive Drew Nelson, had itself acquired the business in 2018 with other investors from its then German owners Infineon.
As part of the deal that saw Nexperia acquiring 100% ownership, Neptune Six has a first right of refusal option to buy back the business in the event of Nexperia selling the business within a two year window. It is understood that the cost of any reacquisition is at the price which Nexperia acquired full control of the business at £63m.
As well as backing from private equity firm Palladium Partners there is also understood that Dr Nelson and his team have identified potential financial support to upgrade Fab 10 at the site from the Welsh Government, as well as the UK Government’s Automotive Transformation Fund.
Alongside reacquiring the business (£63m) it has identified a further £100m of required fundraising to position it as a world leading producer of silicone carbide. It would also be seeking to work with Nexperia as a key customer. If reacquired Dr Nelson would not be chief executive.
Silicone carbide chips are needed to power advanced electric vehicles and significantly reduce the time it takes charging points to power vehicles. This would give the UK sovereign supply chain capacity in what is seen not only as a huge growth market globally, but an important asset in arresting climate change. An expansion of the operation in Newport would create a new wave of hi-tech jobs and bolster the wider compound semiconducter cluster in south Wales.
A Welsh Government spokesperson said: “Our priority is to safeguard the future of the hundreds of highly skilled jobs in Newport. We remain fully committed to ensuring the continued development of our compound semiconductor cluster in south east Wales, and the role it plays on a wider UK scale.
"In light of the decision taken by UK Government following a security review, UK Ministers clearly view the internationally-recognised compound semiconductor sector in Wales as a strategic national asset. We therefore call again on the UK Government to publish its long-awaited semiconductor strategy and to invest in the sector to safeguard its future.”
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