Nexperia Hits Back at U.K. ‘Sneering’ at China Ties in Chip Deal
(Bloomberg) -- Nexperia is “disappointed” in the controversy following its acquisition of a U.K. chipmaker and said fears about its ties to China are unfounded.
“We’re always sneered at because people say we’re a Chinese company,” said Charles Smit, Nexperia’s general counsel, in an interview. “We are not owned or controlled by the Chinese government.”
While the U.K. didn’t prevent Nexperia from buying Newport Wafer Fab Ltd. earlier this month, Prime Minister Boris Johnson has now asked his national security adviser to examine the deal. The scrutiny follows pressure from lawmakers in his party who argue selling off Britain’s biggest semiconductor manufacturing facility or “fab” to Netherlands-based Nexperia is a national security concern because it’s ultimately owned by China-headquartered Wingtech.
Nexperia is confident it can make a case in support of the deal, Smit said. Newport Wafer Fab doesn’t directly supply the military, and its technology isn’t exactly bleeding edge, he said. It makes parts for microchips usually used for controlling power levels. “We’re talking about products that you use when you turn on your coffee machine and you make toast in the morning,” he said.
Still, the takeover was announced in the midst of a global shortage of semiconductors that’s snarled industries from cars to consumer electronics and led governments in Europe and the U.S. to focus more closely on ways to spur more home-grown chip supplies.
Wingtech’s biggest shareholder is Chief Executive Officer Zhang Xuezheng, who goes by the name Wing and is also the CEO of Nexperia. Wing isn’t a party member and Wingtech, which owns a number of semiconductor companies, isn’t state controlled, Smit said. Smit said the Chinese state exerts no direction over Nexperia’s management, and he wouldn’t work there if it tried.
Wingtech’s shareholder register shows a number of entities that are owned or part-owned by Chinese state bodies, according to data firm Datenna. Almost 30% of Wingtech’s shares can be traced back to government entities, it said.
Smit said those holdings don’t indicate state control, and put them down to municipalities simply investing to make a return on their capital or to entice Wingtech to build facilities in their areas.
“There is competition among cities and regions in China to get people to invest in them,” he said. “The fact is Wing is controlling Wingtech, and not these cities or governments.”
He said the shareholders are not acting in concert or they’d have to declare it, according to Shanghai stock exchange rules. He said the company has no facilities in Xinjiang, where China has been accused of human rights violations.
Nexperia is surprised that the deal has proven so controversial when “we’re actually rescuing a British fab and trying to improve it,” Smit said.
Newport Wafer Fab had revenues of about 30.9 million pounds ($42.6 million) and posted a net loss of 18.6 million pounds in 2020. It was sold for about 63 million pounds, according to a person familiar with the deal.
“There’s no software, there’s no data, there’s nothing in there,” he said. “We’re in second division. If you would want to invest in a new fab with the lowest nanometer sizes today, you would have to pay $15 billion to $20 billion,” he said, alluding to the likes of world-leading firms like Taiwan Semiconductor Manufacturing Co., which plans to spend $100 billion in the next three years to grow its chipmaking capacity.
©2021 Bloomberg L.P.