The Welsh microchip factory being taken over by a Chinese-backed technology company is part of a taxpayer-funded project to develop sensitive British defence systems.
Newport Wafer Fab is involved in of a £5.2m scheme which uses advanced chips to support radar and satellite systems for the Government, alongside defence companies Leonardo, MBDA and Arris. It also has a string of other public contracts.
The disclosure will pile further pressure on the Government as it oversees a national security review of Newport Wafer Fab’s sale to Nexperia.
This month, Boris Johnson ordered a review of the sale by Sir Stephen Lovegrove, the national security adviser. Nexperia is owned by Wingtech, a Chinese-technology company partially owned by organisations funded by Beijing.
Tom Tugendhat, chairman of the Foreign Affairs select committee, said: “Britain has paid for the research that makes Newport Wafer Fab a key partner in a UK government defence project. That’s why we need a complete review of the decision on national security grounds."
In 2019, Newport Wafer Fab was part of a group given £2.4m by the Welsh Government to develop high-frequency chips for use in communication systems such as radar and 5G networks.
This was described as a project to bolster the UK’s supply chain in the components. The organisations involved – which included Cardiff University, the defence companies and the publicly funded Compound Semiconductors Application Catapult – also pledged to put in £2.8m of their own money.
It is unclear if the project, first reported by CNBC, will pass to a spin-off company being created by Drew Nelson, who sold Newport Wafer Fab to Nexperia two weeks ago. The plant is believed to have had a relatively small role in the project.
In total, Newport Wafer Fab was involved in more than a dozen government-funded programmes worth about £55m, according to one source close to the deal.
Newport Wafer Fab, Britain’s biggest microchip manufacturer by volume, was bought for about £65m after Nexperia exercised contractual rights over the company it obtained in 2019.
Ministers had assessed the deal on national security grounds, saying there was no reason to block it, but Mr Johnson ordered a review after MPs raised concerns over the sale.
Nexperia has said it is willing to address any issues and has said it has a large and diverse set of shareholders.