Published on: May 30, 2022

The Acquisition of Newport
Wafer Fab and Nexperia

On the 6th of July 2021 it was announced that the largest UK chip manufacturer, Newport Wafer Fab, was about to be acquired by Nexperia for £63 million ($87 million). Nexperia, a semiconductor company with headquarters in Nijmegen, Netherlands is 100% owned by the Chinese company Wingtech Technology.

Acquisition Cases

Short read

  • Between 2020 and 2021 the Chinese computer and telecom equipment manufacturer Wingtech acquired Nexperia (Dutch semiconductor company) and Newport Wafer Fab (largest UK chip manufacturer).
  • At the time of these acquisitions, the ownership structure of Wingtech featured many Chinese governmental entities as UBOs, resulting in high risk of government influence.
  • These acquisitions may come with risks, as they fit into the larger strategy of Made in China 2025, and they have already resulted in some changes within the owned companies, such as replacing of managerial personnel.
Zhang Xuezhang (CEO Wingtech Technology)(Nexperia)

“Nexperia will stay an independent company, operating under Dutch law, and with the same management team, led by CEO Frans Scheper”.

Background

Wingtech Technology is a Chinese computer and telecom equipment manufacturer for the country’s largest smartphone companies including Huawei Technologies and Xiaomi Corps. Nexperia is a European semiconductor company formerly known as NXP semiconductor standard products business division. With the acquisition of Newport Wafer Fab, Nexperia aims at expanding its production capacity.

A new CEO at Nexperia

In december 2019 Wingtech acquired about 80% of the shares in Nexperia for 26.854 billion RMB (4.4 billion USD). In 2020 Wingtech acquired another 20% of the shares. At the time of the acquisition, it was stated that the management team of Nexperia would remain unchanged. However, only half a year later CEO Frans Scheper was replaced by Zhang Xuezheng and sent on early retirement. Zhang Xuezheng is also CEO and Chairman of the board of Wingtech Technology.

Links to the Chinese government

At the time of the acquisition of Newport (2021), the ownership structure of Nexperia’s Chinese mother company, Wingtech, featured many different Chinese governmental entities as UBOs (ultimate beneficial owners). The shareholders, in fact, led to several provincial and municipal SASAC committees (State-owned Assets Supervision and Administration Commission), provincial departments of finance, as well as specific government-run semiconductor investment funds. We identified that almost 30% of the total shares of Wingtech could be traced back to Chinese government entities. According to these figures, Datenna recognized a high risk of government influence in the company.

View Wingtech ownership tree (2021)

During the following year (2022), the ownership of Wingtech went through some changes. Many of the UBOs are still government entities, ranging from Municipal SASAC committees and provincial Departments of Finance to State-owned Investment Funds. The overall percentage of shares that can be traced back to Chinese government entities, though, diminished to a total of around 20%. As a result of these changes, Datenna identifies a medium level of risk of government influence.

View Wingtech ownership tree (2022)

China’s ambitions in the semiconductor industry

In 2015, China launched the Made in China 2025 plan. The goal of MiC2025 is to reduce China’s dependence on foreign technology by raising its self-sufficiency rate and create more high-level industries. China is still heavily reliant on the import of semiconductors. China has the largest semiconductor market, but only 16% of the semiconductors it uses are produced within the country itself. Under the MiC 2025, this share should rise to 70% by 2025.

At Datenna, we do see a correlation between the strategy of the Chinese government to increase China’s self-sufficiency in the semiconductor industry and the risk of state-influence in the acquisitions in the semiconductor industry in Europe and worldwide. Acquisition cases as Nexperia and Newport Wafer Fab fit well into the larger strategy of the Chinese government.