Newport Wafer Fab blames UK government over 100 redundancies plan

Newport Wafer Fab (NWF), Britain's biggest producer of semiconductor components, has pointed the finger of blame at government restrictions for its decision to chop 100 employees amid uncertainty over future ownership.

Back in 2021, the Welsh-headquartered company was sold for £63 million ($79 million) to Dutch chipmaker Nexperia – which was itself bought by Chinese biz Wingtech in 2021. The transaction was waved through at the time, but UK politicians late last year decided to forced a sale of NWF under national security legislation, such is the seeming concern about its ultimate owner in the Middle Kingdom.

Nexperia subsequently called in the lawyers in December to challenge the ruling in court, and in March warned it would need capital to remain solvent during a sale, and said staff departures could cripple production and the viability of operations.

Fast-forward to this week and Nexperia is proposing to ax 100 workers, with a spokesperson telling The Reg it is having to cancel investments. "This is a business decision that has not been taken lightly but one that we are taking to protect the future viability of the site."

"When Nexperia first acquired the Newport site, we saw a strongly positive long-term future for its highly skilled people. Nexperia expanded the team there and provided pay rises, bonuses and improved pension plans.

"It will take many months until the Newport site’s future will become clearer. The Judicial Review process is disappointingly slow, for reasons beyond Nexperia's control. Continuing to explore a potential sale of the site, as directed by the Government, is also likely to take many months.

"Our priority has always been our employees, and we are doing everything to support those affected at this time."

The current industry-wide downturn in semiconductor sales post pandemic is also not helping NWF's financial fortunes.

The UK government's directive, as authorized under the National Security and Investment Act 2021, is for Nexperia to offload at least 86 percent of its interest in NWF within a specified period.

The risk to national security, as outlined by the Department for Business, Energy & Industrial Strategy, is the know-how and tech that could come from a "potential reintroduction of compound semiconductor activities" at the Newport site, and the "the potential for those activities to undermine UK capabilities."

Giving evidence to a committee for BEIS in the summer of 2022, Nexperia's UK country manager Toni Versluijs said it had already made £160 million ($200 million) of investments in NWF since its takeover, and said many of its 500 local staff were unhappy with the UK government's stance.

"If you look at the facts, then Nexperia saved, actually, Newport from bankruptcy," he said at the time.

In a statement on X, Vaughan Gething, Welsh Economy Minister, said the Nexperia announcement "is extremely worrying and comes as a body blow to its talented workforce in Newport.

"The Welsh Government is ambitious for the compound semiconductor industry in south Wales. We will continue developing it further with major companies who are investing in the cluster. Our aim is keep doing so alongside a UK Government that acts like a genuine partner.

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"However, we have consistently warned that delays and indecision from the UK Government over the potential sale of Newport Wafer Fab have consequences."

He added: "It is critical that any new owner of the business has the means and intention to invest in the site as soon as possible. Meanwhile, the Welsh Government will provide assistance and support for all employees affected by today's announcement."

A spokesperson for UK government sent us a statement:

"We're deeply concerned about the job cuts at Newport Wafer Fab. While we don't comment on national security decisions, we recognise the significance of Nexperia Newport to the local economy and the uncertainty faced by its employees and families. Our commitment remains towards a successful divestment of the site.

"The Government has an ambitious plan and long-term vision for the UK’s semiconductor industry. With an investment of up to £1 billion over the next decade and a strategy shaped in close collaboration with the industry, we are dedicated to ensuring its robust and continued growth." ®