China’s largest smartphone assembler Wingtech Technology on Monday said it has completed its acquisition of the UK’s largest chip plant, in a move aimed at securing new sources of semiconductors amid a global supply crunch.
The Chinese company said it received notification last week from Companies House, the UK registrar of companies, that ownership of Wales-based Newport Wafer Fab has been transferred to Wingtech subsidiary Nexperia.
“The transfer of the ownership has been completed, and Wintech now indirectly owns the target company [Newport Wafer Fab] 100%,” Wingtech said in a filing with the Shanghai stock exchange.
The company bought Newport, which primarily makes automotive-related chips, from Neptune 6 through Nexperia for an undisclosed sum.
Wingtech’s announcement comes despite concerns raised in the UK over the national security implications of the deal. British prime minister Boris Johnson had asked his national security adviser to review the deal, while Tom Tugendhat, chair of the foreign affairs select committee, called for the acquisition to be reviewed under the National Security and Investment Act.
Wingtech and UK authorities did not immediately respond to Nikkei Asia‘s requests for comment.
The apparently swift completion of Wingtech’s acquisition contrasts with many other foreign chip deals that are still awaiting Chinese and UK regulatory approval, including Nvidia’s record USD 40 billion bid last year to buy SoftBank-controlled chip designer Arm, which is based in the UK. The bid drew regulatory scrutiny and has not yet received the nod from Chinese authorities.
The deal also comes as major economies from the US, Europe, China, Japan, South Korea are gearing up to strengthen onshore semiconductor production amid the unprecedented global chip shortage that hit a swath of industries from PCs to automobiles.
The Newport chip plant should help Wingtech secure more automotive chips, which have been in short supply for the past several months due to the coronavirus pandemic and other factors. The acquisition also came as China’s largest contract chipmaker Semiconductor Manufacturing International Corp. remains blacklisted by the US government, restricting its access to American chip production tools needed to facilitate its tech advancement.
Newport Wafer Fab, however, reported a net loss of GBP 18.61 million (USD 25.8 million) on revenue of GBP 30.91 million last year. The plant counts Nexperia, Samsung, Motorola, and other chip developers as its clients. Wingtech said in the stock exchange filing the money-losing chip plant would have a limited impact on the group’s financial performance given its relatively small size. Wingtech’s revenue was RMB 51.7 billion (USD 7.98 billion) in 2020 with a net profit of RMB 2.46 billion, nearly double from a year ago.
Wingtech, founded in 2006 by Zhang Xuezheng, a former STMicroelectronics engineer, is the largest Chinese smartphone assembler. It counts Xiaomi, Oppo, and Samsung among its clients. The company has aggressively expanded its footprint in the electronics supply chain from chips to other key components in recent years. This year, Wingtech acquired factories from O-film Tech, a Chinese smartphone camera module maker.