Newport Semiconductor Factory: ‘Losing these jobs would be devastating’ | technology sector | Latest Updates

TeaThe clean room in Newport, South Wales, is the size of a football field, but in the industry they call it a ballroom. The workers move the silicon wafers from one end to the other in a series of careful steps throughout the bodysuit. The 20cm slice of silicone is rigorously cleaned in a chemical bath, before light is used to create the precise pattern, which is then engraved. This all happens in an orange darkroom to prevent the light-sensitive chemicals from reacting.

After testing defects by robots and people, owner Nexperia sends thousands of wafers each week to be cut into hundreds or even thousands of pieces at its other plants in Asia. They in turn will be shipped around the world for use in circuit boards controlling the flow of electricity in devices ranging from vacuum cleaners to Jaguar Land Rover cars.

“A chip travels the world twice before it’s used, not only for Nexperia but for any company,” Tony Versluijt, UK country manager for the Dutch company, said in an interview at the factory.

Governments want to be part of the semiconductor industry. More than a trillion chips were used globally last year to control all kinds of electronic equipment. Yet the Newport plant’s international ties have made it a target of the British government. Nexperia is owned by China’s Wingtech, which critics believe may be under influence from Beijing. Now ministers have ordered Nexperia to leave the Newport site, 16 months after taking it over in July last year.

The company is angered by passing reviews by the Department for Trade and Boris Johnson’s national security adviser. It has pledged to do whatever it takes to overturn the decision which jeopardizes 550 jobs and an £80m investment programme.

Tony Versluijs is the Country Manager for Nexperia in the UK. Photograph: Adrian Sherratt/The Guardian

Its executives have gone further, telling the Guardian they are looking for investment to double or triple production, with the option of building two new factories (known as fabs) in response to global shortages of semiconductors. Thinking of a program.

Paul James, Newport Fab’s managing director, says the plans – still at an early “concept” stage before ruling – will be worth hundreds of millions of pounds in additional investment and could triple the workforce at the site to 1,500. “It was the next logical step,” he says, suggesting the government’s decision is “political rather than based on facts”.

Shedding a potential expansion is Nexperia’s last throw of the dice to persuade the government to change its mind, and some in the industry are skeptical that a company will expand now that the recent uptrend is expected to break. The company has three weeks to seek judicial review of the decision or to divest the site.

Staff at the FAB are not authorized to discuss the situation, but this week the staff association wrote to the business secretary, Grant Shapps, protesting the intervention and met his Labor shadow, Jonathan Reynolds, in parliament on Wednesday. Shapps told Parliament that he had information he could not share.

Mary Curtis, a program manager who has worked at FAB for 35 years and sits on the association, says activists are shocked by the unanimity. “It’s so unfair. We’ve been through very tough times but everything seemed great,” she says. “It feels like a real kick in the teeth.”

Critics of China have welcomed the government’s intervention, fearing a strategic vulnerability for Beijing. In the US, Joe Biden has pushed ahead with plans to invest $52bn (£44bn) in his chips industry, and the EU has said it will invest €43bn (£38bn) to address similar concerns. Will invest

Edward Stringer, a retired air marshal who is now a fellow at the Conservative Party-affiliated thinktank Policy Exchange, says “it may be the right decision”, although he believes the government needs a “better clear series of strategies”. is required. for such sovereign capabilities, and especially for semiconductors”. He adds: “It would be unwise to allow China to control any critical link in these chains.”

Ministers’ public reasons for the intervention center on the ability to expand into making more complex chips, known as compound semiconductors, in South Wales. In a statement that did not explicitly mention China, the government clarified that if Nexperia becomes involved in making such items, or becomes part of a cluster of local businesses working on the technology, its current ownership may pose a threat to national security.

Compound semiconductors made from two elements such as gallium and arsenic are more power-efficient than conventional silicon devices, and demand for them is growing more quickly than conventional varieties.

The government appears to be backing an argument made by former Newport Wafer Fab owner Drew Nelson, a former research scientist turned entrepreneur, that the factory should be a central one in the UK’s efforts to build its semiconductor industry. Must take place. Nelson bought the fab in 2017 in a management buyout backed by the Welsh government, but lost control of Nexperia following financial difficulties.

His plan was to develop the most attractive part of the plant – a mass of blue and yellow pipes built in the late 1980s in the signature inside-out style by the late architect Richard Rogers – to produce wafers for other companies on an open-access basis To do, instead of just supplying Nexperia factories. Nelson declined requests to be interviewed.

A general view of Nexperia's plant in Newport
A general view of Nexperia’s plant in Newport. Photograph: Matthew Horwood/Getty Images

Ron Black, chief executive of Codacip, which makes tools for designing microprocessors, has also expressed interest in taking over the fab should the merger be reversed. He says the government made the right decision, and a consortium he assembled is still interested, though it remains uncertain whether any sale by Nexperia will be in process. Black has a discussion with Nelson.

Versluijs is scathing about the government’s claims of national security concerns regarding compound semiconductors, calling them “extremely far-fetched” and “outlandish”. “It reminds me a little bit of Police, or Minority Report … what can happen if people are judged for what they are.”

The fab’s former owners have accused Nexperia of misleading lawmakers, saying the facility actually had the ability to make compound semiconductors prior to Nexperia’s acquisition. Versluijs hotly disputes this, and his company says that there was only “partial processing of a few wafers in a project where basic engineering support was provided, but there was never any open access semiconductor capability”.

Inside the manufacturing area at the Newport plant.
Inside the manufacturing area at the Newport plant. Photograph: Adrian Sherratt/The Guardian

“We believe it would harm the cluster more than it would benefit it here” to reverse the acquisition, he says. “We believe we are an asset, not a liability.”

The population of Newport appears to be ignorant of the controversy over national security and the UK’s semiconductor industry. But well-paid jobs are highly valued in a city that includes some of the most deprived areas in Wales. Previous sources of funding have come and gone and the city is bracing for the effects of the coming UK recession.

“Everyone is struggling right now,” said Becky Paget, co-owner of Busy Bees Patchwork, a sewing shop near Fab. “If that company goes away, the people who work there might not shop with us.”

Ruth Jones, the Labor MP for Newport West, is “at a loss” over the government’s decision, citing previous reviews that found no concerns over the Nexperia acquisition.

“Nothing has changed since then so why is it being called that now?” she says. The company’s employees “are local … losing these jobs would be devastating”.

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