Newport Wafer Fab is to be taken over by the Chinese Nexperia

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A close-up of a CPU socket and motherboard lying on the table.

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LONDON – Newport Wafer Fab, the UK’s largest chip maker, is slated to be acquired by Chinese semiconductor company Nexperia next week for around £ 63 million ($ 87 million), according to two sources close to the deal who wanted to remain anonymous because the information is still available not public.

Nexperia, a Dutch company wholly owned by China’s Wingtech Technology, told CNBC on Friday that deal talks were ongoing.

The privately owned Newport, South Wales, chip factory dates back to 1982 and is one of only a handful of semiconductor manufacturers in the UK

Nexperia should announce the takeover on Monday or Tuesday, it said.

“We are having constructive discussions with the NWF and the Welsh government on the future of the NWF,” said a Nexperia spokesman. “Until we have come to a conclusion, we cannot make any further comments.”

NWF and Wingtech Technology did not immediately respond to CNBC’s request for comment.

The deal comes during a global chip shortage that has resulted in countries trying to become more independent when it comes to semiconductor manufacturing. The vast majority of chips today are made in Asia, with TSMC from Taiwan, Samsung from South Korea, and SMIC from China being some of the largest chip manufacturers in the world.

Tom Tugendhat, head of the UK government’s China Research Group and chair of the special committee on foreign affairs, said in a letter to UK Economy Secretary Kwasi Kwarteng in June that he was concerned about a possible takeover of the NWF.

“I have to reiterate that the acquisition of the UK’s leading 200mm silicon and semiconductor technology development and processing facility by a Chinese company – in my opinion – poses a significant economic and national security concern,” said Tugendhat.

He called on the UK government to review the deal under the National Security and Investment Act, which was introduced in April to protect the country’s tech companies from overseas takeovers when there is economic risk or a security threat.

“This is the largest last remaining advanced semiconductor factory in England being sold to the Chinese and the UK government doesn’t give a shit about it,” a source said, adding that they should at least try to get $ 1 billion for it.

A UK government spokesman told CNBC: “We are aware of the anticipated acquisition of Newport Wafer Fab by Nexperia. While we do not currently consider it appropriate to intervene, we will continue to monitor the situation closely and will not hesitate to exercise our powers under Company Law should the situation change.

They added: “We remain committed to the semiconductor sector and its important role in the UK economy.”

The £ 63 million price tag for NWF is much lower than the $ 900 million Texas Instruments announced it will pay this week for an abandoned Micron factory in Utah.

NWF has several outstanding debts, including £ 20m with HSBC and £ 18m with the Welsh government, one of the sources said, adding that these will be settled after the sale.

The deal comes after Cambridge chip designer Arm, often considered the jewel in the crown of the UK tech industry, agreed to be acquired by US chip giant Nvidia for $ 40 billion. However, the acquisition is under scrutiny by regulators around the world after rivals Qualcomm and others raised objections.

With tensions rising between China and the West, other countries are investigating Chinese technology acquisitions before approving them.

Earlier this month, South Korea launched a review after Beijing-based Wise Road Capital struck a deal to buy semiconductor company MagnaChip, saying it was a “national core technology.” The US Treasury Department also requested that the parties involved in the transaction file a notice with the US Foreign Investment Committee.

In March, the Italian government prevented the Chinese company Shenzhen Investment Holdings from acquiring a controlling stake in LPE, a Milan-based semiconductor company, praising it as a sector of “strategic importance”.