UK Government to review purchase of Newport Wafer Fab

The sale of Newport Wafer Fab has been temporarily halted for 30 days while the UK government investigates the sale under national security concerns. Who exactly is looking to purchase the Newport Wafer Fab, what are their capabilities, and would the sale pose a national security threat?

Who exactly is looking to purchase Newport Wafer Fab?

Only a few months ago, we reported on the sale of the semiconductor wafer foundry Newport Wafer Fab to Chinese-based investors. At the time, the UK government showed no interest in launching an investigation as it was believed that the foundry poses no major security threat to the UK. However, the UK government has now u-turned on their decision and has now launched an investigation whereby they will have 30 days to decide if the deal should proceed or not. But who exactly is looking to purchase the foundry?

The official buyer of the foundry is Nexperia, a company that spurred off from NXP back in 2016. The reason for this splinter was so that Nexperia could focus on products surrounding mixed-signal electronics for security, embedded computing, and vehicles. During this splinter, Nexperia was sold to a consortium of Chinese investors located in Beijing, and then in 2018, Nexperia was sold to Wingtech Technology Co Ltd.

Nexperia may have started out as a company of Dutch origin, but its controlling power (and thus potential influence) now resides in China, and it is this connection that may have the UK government worried.

What are the capabilities of Newport Wafer Fab?

Before we can determine if the sale of Newport Wafer Fab to Chinese-based investors poses a security threat, we first need to understand the capabilities of the foundry and what devices it produces. The Newport Wafer Fab, located in Wales, employs over 400 staff with a capacity of 32,000 wafers per month with a diameter of 200mm. Devices manufactured by the foundry can have features down to 180nm and can use a multitude of transistor technologies, including MOSFETs and TIGBT.

Additionally, photonics compound processes also allow for the creation of photonic devices, and the foundry can increase wafer production to 44,000 per month if needed. When it comes to physical devices, Newport Wafer Fab specialises in creating various integrated circuit products, including RF MMIC, GAN LEDs, power amplifiers, and SiC devices.

Does the acquisition pose a security threat?

A simple analysis of the situation would suggest that there is no threat to national security as the technology node supported by the foundry is two orders of magnitude greater than that of cutting-edge facilities (180nm compared to 3nm by Samsung). As such, the facility would be unable to produce integrated circuits required for advanced data processing such as AI. Furthermore, the technology needed to produce 180nm is widely available worldwide, meaning that the site would not provide China with any significant technological semiconductor advancement.

However, further analysis of the sale does raise concerns regarding IP protection. China has a long history of IP theft, whether it is outright stealing designs from a company or obtaining plans from manufacturing plants located in China. Furthermore, the ruling communist party installs loyal members into Chinese companies for the sake of intelligence gathering.

It would not be outside the realm of possibility for Chinese agents working at Nexperia to obtain access to data stored by Newport Wafer Fab. This data would include any designs submitted by customers, and the combination of metadata associated with client files with the client’s name would give engineers insight into the function of those designs. Considering that Newport Wafer Fab specialise in power electronics and photonics, this could provide China with next-generation designs relating to EVs, power converters, and fibre-optic systems.

Overall, Newport Wafer Fab is more likely to pose a threat to commercial enterprises than to national security. It should also be noted that while China is well known for its rampant IP theft and copyright violations, China is also responsible for huge investments around the world that help fund research and technological advancements, and not every company in China is loyal to its government (there are numerous companies that have publicly resisted government actions in the hope of protecting user data).