Jhe cleanroom in Newport, South Wales, is the size of a football pitch, but in the industry it is referred to as a ballroom. Workers in full suits move silicon wafers from end to end in a series of painstaking steps. The 20cm silicon wafers are rigorously cleaned in chemical baths before light is used to draw precise patterns which are then etched. Everything takes place in an orange penumbra to prevent light-sensitive chemicals from reacting.
After robots and people test for defects, owner Nexperia ships thousands of wafers every week to its other factories in Asia to be cut into hundreds or even thousands of pieces. These will in turn be shipped around the world for use in circuit boards controlling the flow of power to devices ranging from vacuum cleaners to Jaguar Land Rover cars.
“A chip travels the world twice before it is used, not just for Nexperia but for any company,” said Toni Versluijs, the Dutch company’s UK country manager, in a factory interview.
Governments want to be part of the semiconductor industry. More than a trillion chips were used around the world last year to control all types of electronic devices. Yet the Newport factory’s international links have put it in the crosshairs of the British government. Nexperia is owned by China’s Wingtech, which critics say may be influenced by Beijing. Ministers have now ordered Nexperia to abandon the Newport site, 16 months after taking it over in July last year.
The company is outraged, having passed examinations by Boris Johnson’s trade department and national security adviser. He has promised to do whatever it takes to overturn a move he says will jeopardize 550 jobs and an £80m investment scheme.
Its executives went further, telling the Guardian that they were considering an investment program to double or even triple production, with the possibility of building two new factories (called fabs) in response to a global shortage of semiconductors.
Paul James, managing director of the Newport plant, said the plans – still at an early “concept” stage before the decision – would represent hundreds of millions of pounds of additional investment and could triple the number of employees on the site at 1,500. “It was the next logical step,” he says, suggesting the government’s decision is “political rather than fact-based.”
Touting the potential expansion is a final roll of the dice for Nexperia to persuade the government to change its mind, and some in the industry are skeptical of expanding a business now that the recent boom is set to crumble. The company has three weeks to request a judicial review of the decision or transfer the site.
Factory workers are not allowed to discuss the situation, but the staff association wrote to business secretary Grant Shapps this week opposing the intervention, and met his Labor shadow, Jonathan Reynolds, in parliament on Wednesday. Shapps told parliament he was aware of information he could not share.
Mary Curtis, a program manager who has worked at the plant for 35 years and sits on the association, says the workers are unanimously shocked. ” It’s so unfair. We went through a very difficult time, but everything seemed much rosier,” she says. “It’s like a real kick in the teeth.”
Critics of China welcomed the government intervention, fearing strategic vulnerability vis-à-vis Beijing. In the US, Joe Biden pushed through plans to invest $52bn (£44bn) in his chip industry, and the EU announced it would invest €43bn (£38bn). sterling) to address similar concerns.
Edward Stringer, a retired air marshal who is now a member of the Tory-linked Policy Exchange think tank, says ‘it may well be the right decision’, although he thinks the government has need for a “set of better articulated strategies”. for such sovereign capacities, and in particular for semiconductors”. He adds: “Allowing China to control any vital link in these chains would not make sense.”
Ministers’ public reasons for intervention center on the potential for South Wales to expand into the manufacture of more complex chips known as compound semiconductors. In a statement that does not explicitly mention China, the government explained that if Nexperia becomes involved in the manufacture of such items, or is part of a group of local companies working on the technology, its current ownership could constitute a threat to national security.
Compound semiconductors, made of two elements such as gallium and arsenic, are more energy efficient than traditional silicon devices, and demand is growing faster for them than for traditional varieties.
The government appears to support an argument by former Newport Wafer Fab owner Drew Nelson, a former researcher turned entrepreneur, that the factory should take center stage in the UK’s attempts to grow its semiconductor industry. Nelson bought the factory in 2017 in a management buyout backed by the Welsh government, but lost control to Nexperia after financial difficulties.
His plan had been to develop the most striking part of the factory – a mass of blue and yellow pipes built in the 1980s in the signature upside-down style by the late architect Richard Rogers – to produce wafers for other companies on an open-access basis, rather than just supplying Nexperia factories. Nelson declined interview requests.
Ron Black, the chief executive of Codasip, which makes tools for designing microprocessors, has also expressed interest in taking over the fab if the merger is called off. He says the government made the right decision and a consortium it has formed is still interested, although he is unsure of the process for Nexperia to sell. Black had discussions with Nelson.
Versluijs is scathing about the government’s claims about national security concerns over compound semiconductors, calling them “extremely outlandish” and “strange”. “It reminds me a bit of Thought Police, or Minority Report… if people are judged on what might happen, what might happen.”
The factory’s former owners have accused Nexperia of misleading MPs, saying the factory actually had the ability to make compound semiconductors before the Nexperia takeover. Versluijs strongly disputes this, and his company claims that there has never been “partial processing of a few wafers in a project where basic engineering support was provided but never open source semiconductor capabilities. “.
“We think it would hurt the cluster more than it would benefit it here” to reverse the takeover, he says. “We think we are an asset, not a liability.”
The people of Newport seem to ignore the dispute over national security and the British semiconductor industry. But well-paying jobs are highly valued in a city that contains some of the most deprived areas in Wales. The old sources of wealth have passed and the city is preparing for the effects of the coming British recession.
“Everyone is struggling right now,” said Beccy Paget, co-owner of Busy Bees Patchwork, a sewing shop near the factory. “If this business disappears, the people who work there may not shop with us.”
Ruth Jones, the Labor MP for Newport West, is “bewildered” by the government’s decision, citing previous critics who found no concern over the Nexperia takeover.
“Nothing has changed since, so why is he called now?” she says. The company’s workers “are local… Losing those jobs would be devastating”.