British chip executives are preparing a rescue bid for Newport Wafer Fab if its takeover by a Chinese-owned company is blocked this week.
A new fund aimed at supporting Britain’s chip sector has declared it would be willing to invest in the Welsh factory. Its founders are also in contact with former Imagination Technologies chief executive Ron Black, who is poised to launch a bid for the semiconductor plant.
Alex Stewart, co-founder of Headlight Technology Partners, a newly formed investment fund, said: “Definitely, we would want to try and be part of helping Newport Wafer Fab.”
Business Secretary Kwasi Kwarteng is poised to rule on whether to approve or block a sale of the business to Nexperia this week, The Telegraph understands.
A government source said the ruling would come before the new Prime Minister is decided on September 5.
The takeover was called under the National Security and Investment Act by the Business Secretary Kwasi Kwarteng in May. The minister asked for more time to examine the deal, with September 12 the final deadline to rule on the takeover.
Headlight is in talks to raise up to £500m to use across a range of investments. The fund is in contact with Ron Black, the former boss of Imagination Technology, who has signaled he is prepared to step in and support Newport Wafer Fab if its sale to Nexperia, a Dutch company owned by Chinese technology company Wingtech, falls through.
Mr Black is understood to have £300m of funding earmarked to buy and grow the factory.
Mr Stewart said: “We know Mr Black is supportive of what we are doing” and said they had a “mutual desire to help UK PLC”.
Mr Black said: “Headlight is pulling together a significant fund and as we have the same passion for helping the UK to excel in semiconductors, we have been in discussions as to the best way to collaborate.”
The Government-backed £1bn Automotive Transformation Fund has also been involved in talks with a consortium about stepping in to fund Newport Wafer Fab should the takeover be unwound, The Telegraph reported earlier this year.
Newport Wafer Fab was acquired by Nexperia in 2021 for £63m. Its 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 “give teeth” to Britain’s semiconductor strategy, providing funding to high tech chip manufacturing businesses. It is planning 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 it was unwound from its current Chinese-backed owners, Nexperia.
He said: “The kind of companies we would be investing in would include potentially one or two fabs that could be helped, including Newport Wafer if it were to no longer be a closed fab.”
Critics have argued that the sale to Nexperia is a strategic risk, handing Britain’s biggest chip factory to China. They have also claimed the takeover will prevent the development of advanced chip technologies in Wales, since the Dutch company plans to turn the factory over to solely focus on its own silicon chips.
Mr Stewart and Mr Mardia wrote to MPs of the Business Committee earlier this summer warning the takeover of Newport Wafer Fab risked harming the South Wales semiconductor industry.
However, Nexperia has argued that the deal saved jobs and secured the long-term future of the site.
In a letter to MPs, it said: “Only Nexperia was able to step in and secure the future of the site and the 500 jobs there. It achieved this by providing access to a reliable flow of global contracts, immediately paying back the loan to the Welsh Government and committing £80m for new equipment to upgrade the site. The previous owners thereby escaped bankruptcy and received full market value for their shares, plus an option to continue developing an ‘open access’ facility on part of the site.”
Nexperia has said it would be open to outside investment in one building at the Newport site, known as Fab 10, which would allow a third party to develop chips at the plant. But such a project could be expected to cost north of £100m, a source close to the plant 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 on its chip sector, has emerged as a world leader. The US and China are also pumping funds into their semiconductor manufacturing capabilities.
Whitehall is also working on a UK semiconductor strategy, expected to be unveiled in the autumn.
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