The takeover of Newport Wafer by Nexperia damages the US company iDEAL Semiconductor

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

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A US semiconductor start-up says its relationship with the UK’s largest chip factory came to an abrupt end when Chinese company Nexperia took over in July.

Pennsylvania-based Ideal Semiconductor has announced to CNBC that it will process silicon wafers at the Newport Wafer Fab in Wales until the factory is taken over by Dutch company Nexperia, wholly owned by Wingtech Technologies, headquartered in Shanghai.

Mark Granahan, CEO of Ideal Semiconductor, said processing “has stalled”.

Nexperia didn’t immediately respond to a CNBC request for comment, but a source close to the company, preferring to remain anonymous due to the sensitive nature of the discussions, previously denied that contracts would be canceled.

Mike Burns, chairman of Ideal Semiconductor, said that fabs typically offer “a bit of runtime” and tell customers how many wafers they can handle in an acquisition.

“It’s usually measured in months, quarters, or a year, as opposed to an abrupt shutdown,” Burns said.

Semiconductor executives said they had been notified by phone from Newport Wafer Fab that the relationship had ended, adding that they had not heard from the new owners.

Controversial deal

The Newport Wafer Fab sale was originally approved by UK Economy Secretary Kwasi Kwarteng, but Prime Minister Boris Johnson has since directed the country’s National Security Advisor Stephen Lovegrove to conduct a review, with a verdict expected in the coming weeks.

It is possible that the UK government could ask Nexperia to sell Newport Wafer Fab and a consortium that includes former Imagination Technologies CEO Ron Black is poised to bid on that.

Meanwhile, antitrust authorities are also investigating whether California semiconductor giant Nvidia can buy British chip designer Arm from Japanese SoftBank, and the $ 40 billion deal is now in jeopardy.

Semiconductors are in short supply, and lawmakers have recognized that the companies that make these devices could be worth protecting from takeovers.

China puts semiconductors at the center of its industrial strategy.

Chinese investment screening specialist Datenna believes China is lagging behind other countries in semiconductor technology, but is trying to boost the sector through foreign acquisitions and state investment funds.

According to Datenna, over the past decade the Chinese government, through its state-backed companies, has acquired stakes in an increasing number of European semiconductor companies that have created an interactive map to provide more transparency about Chinese investments in Europe.