CCP swooped for British microchip maker after Government rejected pleas for Covid loans
Newport Wafer Fab, at the centre of a national security row, was turned down by the Welsh administration and UK governmentByJames Titcomb4 November 2021 • 11:33am
The British microchip company at the centre of a national security row over its Chinese-backed takeover was turned down for Government coronavirus support before being forced into a sale, it has emerged.
Accounts for Newport Wafer Fab showed it was repeatedly rejected by the Welsh government for Covid-19 “economic resilience” grants and failed to meet the criteria for the UK’s coronavirus loan scheme as it suffered a pandemic-induced slump in orders from car manufacturers.
The company was bought by Nexperia, a Dutch company owned by China’s Wingtech, in July after running out of financial options amid a downturn in orders that forced it to idle equipment.
Boris Johnson has ordered a national security review into the deal under pressure from MPs, and the takeover could be reversed under incoming legislation on foreign takeovers.
In accounts filed at Companies House, Newport Wafer Fab, now known as Nexperia Newport, enjoyed a surge in demand amid a global chip shortage. Advertisement
However, it had been unable to boost production immediately, putting it in “financial distress” that led to the sale.
“The outbreak of Covid-19 … led to many supply chains, particularly automotive, shutting down for extended periods of time, which meant that Nexperia Newport’s principal customers did not have any further requirement for spot business,” it said.
“However in the first half of 2021, [we] saw a significant rebound in global demand for semiconductors with this leading to all customers urgently looking to secure longer-term capacity corridors at Nexperia Newport.
“The company applied for several Welsh Government Covid-19 grants under the economic resilience fund, but all were rejected for various reasons. The company was also unable to apply for the Coronavirus Business Interruption Loan Scheme nor the Coronavirus Large Business Interruption Loan Scheme due to not meeting the revenue and/or the profitability track record criteria.”
Newport, which makes the silicon wafers that electronic circuits are printed on, said it had struggled to bring equipment back online amid the jump in demand.Advertisement
Nexperia Newport said revenues fell from £49.4m to £31.1m in the year to September 27 2020, with production volumes halving. Losses doubled from £7.1m to £14.3m and it had just £1.1m in cash at the end of its financial year.
As part of its £63m sale to Nexperia, the Welsh government was repaid a £17.1m loan. Nexperia has said the sale protected jobs and will lead to significant future investment
