The UK government's Automotive Transformation Fund (ATF) could be used to help fund a US-backed consortium's bid for Britain's largest semiconductor plant.
Last July, Wingtech Technology's Nexperia announced it would acquire the Newport Wafer Fab for a reported £63 million ($77m). Wingtech is a Chinese company, with purported ties to the state. But now the deal could be reversed due to national security concerns.
At least two consortia are thought to have expressed interest in taking over the company, which has struggled financially since the pandemic - allowing Nexperia to exercise an option to take over the business after gaining a 14 percent stake.
But the consortia could use the ATF to help fund their acquisition, The Telegraph reports. The ATF was set up last year to fund investment in electric vehicles and infrastructure, pumping around £100m ($126m) into battery maker BritishVolt earlier this year. The automotive fund would be used for Newport as the fab could be retooled to make gallium nitride and silicon carbide chips for electric car charging stations.
The Nexperia deal was not initially set to be reviewed under the newly introduced National Security and Investment Act, but political and public pushback forced the government to open a review.
Prime Minister Boris Johnson requested that national security adviser Sir Stephen Lovegrove look at the deal last year, but it was not clear what the investigation involved. Earlier this month, the head of Wingtech traveled to UK in an effort to win over government officials.
Following the visit, an official "full national security assessment" was launched into the deal last week. The government has 30 working days to carry out the assessment, extendable by up a further 45 working days.
The former head of the UK's National Cyber Security Centre has called the sale a "first order strategic issue" that "goes to the heart of how we should be dealing with China.”
Key to the investigation are the fab's UK government research contracts, including defense-related projects, and its position as the largest chip fab in the country. However, it represents a small portion of the world's semiconductor supply.