On 16 November 2022, the Secretary for Business, Energy and Industrial Strategy made a final order under the National Security and Investment Act 2021 (NSI Act) reversing the takeover of Britain’s largest semiconductor plant, Newport Wafer Fab (subsequently named Nexperia Newport Limited (NNL)).
Nexperia BV (Nexperia), a Dutch-based technology company and subsidiary of Shanghai listed Wingtech, acquired an additional 86% share capital of NNL, making it a wholly owned subsidiary of Nexperia in July 2021. The deal is now being reversed by the Secretary of State on the basis that the transaction poses a risk to national security for the following reasons:
- the location of the NNL plant as part of a semi-conductor cluster in the area could facilitate access to technological expertise and know-how, and the link between the site and this cluster could prevent the cluster being engaged for future projects relevant to national security; and
- the technology and know-how that could result from a potential reintroduction of compound semiconductor activities at the site could undermine UK capabilities.
As a result, Nexperia will have to divest its ownership in NNL to the shareholding it held prior to the takeover, meaning it will need to sell at least 86% of its shareholding within a specified period.
Nexperia have said they intend to appeal the decision.
The decision shows the Government’s willingness to exercise its powers under the NSI Act but also highlights the time it may take for the Government to review a transaction after it has been called in, this particular decision was delayed multiple times due to changes in administration. It is another reminder that parties should carefully consider whether a proposed transaction falls within the remit of the NSI Act and to seek advance clearance. This was not possible for Nexperia as the NSI Act came into force after the transaction completed, but the Government relied on the retrospective application of the Act.