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A China-backed firm is being forced to sell its majority stake in a microchip factory in Wales amid national security concerns as tensions between Beijing and the West continue to soar. On Wednesday evening, Westminster asked Nexperia to sell its stake in Newport Wafer Fab, the South Wales factory which focuses on microchips, also known as semiconductors. Microchips are used in all kinds of technological devices, from washing machines to smart phones, as well as in the automotive industry. Whereas Nexperia is a Netherlands-based company, it’s a subsidiary of Shanghai-listed Wingtech, and it bought an 86% majority stake in the Welsh micro-factory in July 2021.

The order to sell its stake comes after a thorough investigation, but Nexperia has pledged to fight the decision which it says is “shocked”. The company also said it would immediately appeal the order issued by Business Secretary Grant Shapps under the National Security and Investment Act.

A government spokesman said: “Following a detailed national security assessment, the Business Secretary has decided to issue a final order requiring Nexperia to sell at least 86% of Newport Wafer Fab to [mitigate] against potential national security risks. »

It comes after the government was previously called upon to intervene by the House of Commons Foreign Affairs Committee, which argued that the takeover of Nexperia marked the sale of ‘one of the Kingdom’s most prized assets Kingdom” to a strategic competitor and could jeopardize national security for two reasons.

The first was that Nexperia’s development of the Newport site could “undermine UK capabilities” in semiconductor production. The warning came as the global chip industry suffered a shortage during the pandemic, triggering major supply chain issues. Meanwhile, China also has dominant control over the microchip market, something the West is trying to change.

A China-backed firm has been ordered to sell its stake in a UK-based microchip factory (Image: Getty)

Nexperia

The Newport Wafer Fab plant manufactures microchips, which are used in a range of technologies (Image: Getty)

The other security threat concerns the location of the factory in the semiconductor cluster of the Duffryn industrial zone, which could “facilitate access to technological expertise and know-how”. The government has been warned that Chinese ties to Newport “could prevent the cluster from engaging in future national security-related projects”.

The move also comes after security chiefs from the US and UK called for greater vigilance over the threat of Chinese infiltration into Western tech companies in a joint speech. MI5 Director General Ken McCallum, FBI Director Chris Wray have both warned that the Chinese Communist Party’s “strategic plans” to overtake the West pose a serious risk to British business and research.

Mr McCallum said: “If you’re involved in high tech [such as] AI, advanced research or product development, there is a good chance that your know-how is of material interest to the CCP. And if you have, or try to get or [have] a presence in the Chinese market, you will receive more attention than you might think. It has been described as “the greatest transfer of wealth in human history”. MI5 teams see the CCP working to extract advantage from the UK in several ways.”

And while Prime Minister Rishi Sunak was Chancellor, he helped pass the National Security Investment Bill to “protect us from countries like China trying to infiltrate our businesses and steal our technology”.

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Microchips

China has a stranglehold on the microchip market (Image: Getty)

The National Security Investment Act allows the government to block investments in UK companies that could affect the nation’s security. And at the G-20 meeting in Bali, Mr Sunak warned that Beijing poses a systemic challenge to British values ​​and poses the “greatest state threat to our economic security”.

He told reporters: “I think China poses a systemic challenge to our values ​​and interests and poses the greatest state threat to our economic security. I think that view, by the way, is very aligned with our allies.

Along with the perceived threat to economic security, there are also fears that China is capitalizing on the UK’s technological know-how, which a number of politicians have sounded the alarm over. Sir Iain Duncan Smith, the former leader of the Conservative Party, previously told Express.co.uk in an exclusive interview that China is investing in UK universities to “steal their technology” and “subvert them”.

He told Express.co.uk: ‘We should stop the way they pour money into UK universities and their point is to get technology from these universities. And also knowing that many of the future establishments will be drawn from these institutions, they try to subvert them. It’s all part of the game and everything they do revolves around it.

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Grant Shapp

Grant Shapps made the order under the National Security and Investment Act (Image: Getty)

Sunak

Sunak said China was a systemic threat to British values (Image: Getty)

“And also knowing that many of the future establishments will come from these institutions, they try to subvert them. It’s all part of the game and everything they do revolves around it.

But these tensions come at a time when relations between China and the West are rapidly deteriorating. The most alarming fears for the Western world are that China will invade Taiwan, the island nation over which Beijing claims sovereignty.

As US-China relations have taken the biggest hit as tensions soar, Britain has also hinted it will get involved. Former Prime Minister Liz Truss said over the summer that Western allies should learn lessons from Ukraine and provide greater support for Taiwan.

Mr Sunak said he was fine with Britain sending arms to the self-governing island and argued the option would be considered as part of an overhaul of the foreign policy review and defense.

He said: “We are looking at all of these policies as part of our integrated review update. Our policy in Taiwan is obviously that there should be no unilateral change in status and there should be a peaceful resolution. of this situation. We stand ready to support Taiwan as we do to resist Chinese aggression.”

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