The Acquisition of Newport Wafer Fab

As part of our ongoing research into Chinese acquisitions in Europe, Datenna decided to highlight and research remarkable cases. This case considers the acquisition of the UK semiconductor manufacturer Newport Wafer Fab

Short read

UK’s largest semiconductor plant Newport Wafer Fab to be acquired by Nexperia, a Dutch semiconductor firm
Nexperia was acquired by the Chinese company Wingtech Technology in 2019
High-level Chinese state influence through many ownership layers
Chinese ambitions to reduce reliance on the foreign semiconductor industry

The sale of Newport Wafer Fab and Nexperia

On the 6th of July it was announced that the largest UK chip manufacturer, Newport Wafer Fab, is set 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.

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.

Links to the Chinese government

When looking at the complex ownership structure of Wingtech Technologies, a high-level of state influence can be identified through many layers of ownership. The shareholders lead 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 can be traced back to Chinese government entities, which is quite a significant level.

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.

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

Zhang Xuezhang (CEO Wingtech Technology)(Nexperia)

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 level of state-influence in the acquisitions in the semiconductor industry in Europa and worldwide. Acquisition cases as Nexperia and Newport Wafer Fab fit well into the larger strategy of the Chinese government.