Recently, it was announced that Nexperia is in the process of acquiring the UK’s largest semiconductor fabrication plant Newport Wafer Fab. What is the value of this acquisition, what capabilities does the wafer plant have, and how does this acquisition demonstrate a need for the UK to improve its production capabilities?

Newport Wafer Fab to be acquired by Nexperia

Recently, Nexperia announced that it will be acquiring the UK’s largest semiconductor fabrication plant Newport Wafer Fab for a total of $87 million. The plant, which was opened in 1982, has been at the forefront of UK semiconductor technology, and its acquisition by the Dutch company Nexperia has led some to be concern regarding national security.

In a time where semiconductors are already in short supply, selling the UKs largest chip fabrication plant capable of producing automotive-grade devices to a foreign entity can seem like a wrong move. However, it is not so much that Nexperia is a foreign-owned company that is the cause of concern but that Nexperia is Chinese-owned. Tensions between the West and China are already at an all-time high, and the trade restrictions between the West and China is seeing each side fighting a semiconductor cold war.

Newport Wafer Fab could be purchased as soon as early July, and the acquisition details are currently being discussed by the Welsh Government. Furthermore, Nexperia cannot comment further on their acquisition deal of Newport Wafer Fab until a conclusion has been made with the Welsh Government. Moreover, the UK government has stated that while it was aware of the takeover, it will not be intervening in the acquisition.

What are the capabilities of Newport Wafer Fab?

The official website of Newport Wafer Fab outlines all the capabilities of the facility. To start, the facility can produce up to 32,000 wafers per month which can be expanded to 44,000 wafers if required. The maximum wafer size manufactured by Newport Wafer Fab is 200mm, and the photolithography capabilities range from 0.18um to 0.7um.

Furthermore, devices that Newport Wafer Fab can produce including MOSFET, TIGBT, and silicon photonics, and wafers can be used to produce CMOS, analogue, and compound semiconductors. The site also states that the facility was primarily used for wafer production between 1992 to 2002 and has since developed effective systems for technology transfers.

How does the acquisition demonstrate the UKs semiconductor dire state?

While an $87 million price tag may seem like a substantial amount of money, it pales compared to other facilities around the world. For example, Texas Instruments recently acquired a vacant Micron fab located in Utah for $900 million, and this facility is far from being the largest in the US.

The value of the UK’s largest wafer fabrication site is minimal compared to other facilities. Its photolithography process is only 180nm, which is significantly larger than what other companies worldwide can produce. While not all electronics require the smallest technology node, 180nm is a technology that dates back to 1999, the UK’s largest wafer fabrication site is unable to produce processors, memory, or other logic critical components.

As such, the UK’s largest fabrication site is limited to more niche devices such as medical, automotive, and R&D devices. It is stated on the Newport Wafer Fab site that they are part of the CS Connected, a group of Universities and R&D centres supported by the Welsh Government to help develop bespoke solutions.

While these comments about Newport Wafer Fab may seem derogatory, it is crucial to understand that the UK’s largest wafer facility cannot produce devices at the forefront of technology. This is further supported by the UK governments lack of interest in intervening with the acquisition by a Chinese-owned company. It should also be noted that the UK government has been pushing hard to keep Chinese technology and interference out of the UK with the ban on Huawei and potential blocking of the sale of ARM. Thus, if the UK government is uninterested in the acquisition, the facility is unlikely to house cutting-edge technology that China could take advantage of.

The COVID pandemic has demonstrated how sensitive the semiconductor industry is and the vital role it plays in the world economy. It is said that countries run on oil, but the past year has demonstrated that countries are just as reliant on semiconductors.

If anything can be learned from the acquisition of Newport Wafer Fab, it’s that the UK is seriously behind in the semiconductor industry. Sure, the UK was responsible for forming major companies such as ARM, but semiconductors are more than just being able to design a chip on paper. The UK needs to create its own semiconductor industry that would provide employment opportunities and strengthen the countries’ national security by ensuring that it can consistently produce its own high-end devices, including processors and memory, even if just for military purposes.