Tech investors prepare Newport Wafer Fab bailout bid if China deal stalls

British chip executives are preparing a rescue bid for Newport Wafer Fab if its takeover by a Chinese company is blocked this week.

A new fund to support Britain’s chip industry has said it would be willing to invest in the Welsh factory. Its founders are also in contact with former Imagination Technologies CEO Ron Black, who is set to launch a bid for the semiconductor factory.

Alex Stewart, co-founder of Headlight Technology Partners, a newly created investment fund, said: “We would definitely like to try to be part of helping Newport Wafer Fab.”

Business Secretary Kwasi Kwarteng is set to rule on whether to approve or block a sale of the business to Nexperia this week, according to The Telegraph.

A government source said the decision would come before the new prime minister is chosen on September 5.

The takeover was announced under the National Security and Investment Act by Business Secretary Kwasi Kwarteng in May. The minister has asked for more time to review the deal, with September 12 being the latest deadline to rule on the takeover.

Headlight is in talks to raise up to £500m to be used in a range of investments. The fund is in contact with Ron Black, the former boss of Imagination Technology, who has said he is ready to step in and support Newport Wafer Fab if its sale to Nexperia, a Dutch company owned by Chinese technology company Wingtech, fails. .

Mr Black is said to have £300million in funding to buy and expand the factory.

Mr Stewart said: ‘We know Mr Black supports what we do’ and said they had a ‘mutual desire to help UK PLC’.

Mr Black said: “Headlight is raising a significant fund and as we have the same passion for helping the UK excel in semiconductors, we have had discussions about how best to collaborate.”

The government-backed £1billion Automotive Transformation Fund has also been involved in talks with a consortium on the possibility of stepping in to fund Newport Wafer Fab should the takeover be reversed., The Telegraph reported earlier this year.

Newport Wafer Fab was acquired by Nexperia in 2021 for £63m. His fate now hangs in the balance as staff and executives await the government’s verdict on the deal.

Mr Stewart, who founded Headlight alongside Blu Wireless chairman Hemant Mardia, said the fund aimed to “inject some teeth” into Britain’s semiconductor strategy, financing high-end chipmaking companies technology. It plans an initial raise of £100m, targeting up to £500m, and is in talks with taxpayer-backed patient capital funds.

Headlight would aim to invest in advanced chip technologies and materials, such as compound semiconductors, graphene and photonics.

Mr Stewart said the fund could also invest in Newport Wafer Fab, if unwound from its current China-backed owners, Nexperia.

He said: “The type of businesses we would invest in would potentially include one or two factories that could be helped, including Newport Wafer if it were no longer to be a closed factory.”

Critics have argued that the sale to Nexperia is a strategic risk, ceding Britain’s biggest chip factory to China. They also claimed the takeover would prevent the development of advanced chip technologies in Wales, as the Dutch company plans to transform the factory to focus solely on its own silicon chips.

Mr Stewart and Mr Mardia wrote to business committee MPs earlier this summer warning that the Newport Wafer Fab takeover risked damaging the South Wales semiconductor industry.

However, Nexperia argued that the deal saved jobs and secured the site’s long-term future.

In a letter to MPs, he said: “Only Nexperia could step in and secure the future of the site and the 500 jobs there. It did this by providing access to a reliable stream of global contracts, reimbursing immediately loaning it to the Welsh Government and committing £80 million for new equipment to upgrade the site.The former owners thus escaped bankruptcy and received the full market value of their shares, as well as an option to continue to develop an “open access” facility on part of the site.

Nexperia said it would be open to outside investment in a building at the Newport site, known as Fab 10, which would allow a third party to develop chips at the factory. But such a project could cost north of £100m, a source close to the factory said.

Industry sources have complained that the UK semiconductor sector has been left vulnerable to overseas takeovers. At the same time, Taiwan, which has spent billions in its chip industry, has established itself as a world leader. The United States and China are also injecting funds into their semiconductor manufacturing capabilities.

Whitehall is also working on a UK semiconductor strategy, which is expected to be unveiled in the fall.

Tech investors prepare Newport Wafer Fab bailout bid if China deal stalls

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