Welsh semiconductor factory ‘left in limbo’ as Westminster fails to approve US takeover

Labour has criticised “dither and delay” from the government over a decision on a proposed takeover of the UK’s largest semiconductor facility by a US company, warning that it could lead to further job cuts at the Welsh factory.

The fate of Newport Wafer Fab in south Wales has been unclear for nearly two years since the UK government first indicated it had concerns over a 2021 takeover by the Chinese-owned Nexperia firm. The national security concerns related to the ownership of semiconductor technology by a company with links to China.

The government in November 2022 ordered Nexperia to sell the factory, raising questions over its future. About 100 of 550 workers were made redundant or left in the intervening period; this included 60 forced redundancies at the end of last year.

The American semiconductor company Vishay Intertechnology eventually agreed to buy the factory in November 2023 for $177m, and the company is planning $1.2bn in global investments, some of which could benefit Newport.

The deal was welcomed at the time by the Welsh Labour government, but ministers in Westminster have not given the go-ahead for the takeover nearly three months later.

Jo Stevens, the shadow secretary of state for Wales, has written to the secretary of state for Wales, David TC Davies, criticising the government for “dragging its feet” in deciding whether the proposed takeover by Vishay can go ahead.

The letter, seen by the Guardian, argues that the delay has left workers in “damaging limbo which could cost further investment and jobs”, and adds that some redundancies have been made during the period of “dither and delay”.

Oliver Dowden, the deputy prime minister and Cabinet Office secretary, has final say over approval of takeovers that fall within national security rules. On the government’s website, Dowden boasts that officials can “clear most cases within a prompt, business-friendly, 30 working days”.

The situation comes at a sensitive time, as 2,800 workers at the Port Talbot steelworks, further west along the coast, face the prospect of losing their jobs with the imminent closure of its two blast furnaces.

Newport Wafer Fab does not employ as many people as the steelworks but the company is one of the few UK companies with the ability to make semiconductors. The factory makes chips for controlling power in devices ranging from vacuum cleaners to Jaguar and Land Rover cars, although it does not make the smallest, most cutting-edge, chips that are most strategically valued – a fact that some people have argued diminishes any national security concerns.

Mary Curtis, a programme manager at Newport Wafer Fab, said all development work at the site had stopped and it could not take new orders because of the delays, which had also affected workers.

“Since November 2022 we’ve been faced with a very uncertain, precarious, time,” she said. “In terms of national security there shouldn’t be any cause for concern. We can’t see what’s causing the delay. The employees are struggling with it, so are Vishay and Nexperia.”

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Labour argued in the letter to Davies that Vishay was “based in the US, a close ally and strategic military partner”.

A UK government spokesperson said: “We are committed to ensuring that the UK semiconductor industry continues to grow and thrive across the UK, including in South Wales.

“Our ambitious semiconductor strategy, which was published earlier this year, is providing investment of up to £1bn in the sector over the next decade.”

Vishay declined to comment.