More than £20m of taxpayer-backed technology projects are at risk after the Government pulled funding from the Welsh microchip plant now under Chinese ownership.

Newport Wafer Fab, Britain’s biggest microchip facility, was involved in four projects that had applied for public support, according to sources close to the company.

Ministers recently froze grants to the company from UK Research and Innovation after it was sold to Nexperia, a Dutch technology company owned by China’s Wingtech. 

Boris Johnson recently referred the deal to Sir Stephen Lovegrove, the national security adviser, with the Government saying it will not hesitate to block it if it is deemed a security concern.

It is now feared that the sale could create a knock-on effect on a hub of semiconductor companies in south Wales, where about 1,500 people are employed.

The four research applications would have involved £20.4m in total investment from the Government and companies involved. They included a project to develop photovoltaic cells for solar-powered satellites, and to develop advanced power electronics modules for electric cars.

Drew Nelson, Newport Wafer Fab’s chairman who sold the company to Nexperia, is planning to use proceeds from the £65m sale to set up a spinoff plant in the same area, which could renew some of the projects.

However, it is unclear how long the process will take or if Mr Nelson will secure the funding for the new factory.

Chris Meadows of CS Connected, a research organisation aiming to foster a high-tech cluster of companies and universities focused on advanced semiconductors in the area, said losing access to the factory could have a wider impact.

Newport Wafer Fab produces the silicon wafers that electronic circuits are printed onto, but under Mr Nelson had outlined plans to expand into compound semiconductors – an advanced technology that proponents say could mean more powerful chips. 

Backers of the South Wales cluster has said it expects to ultimately employ some 5,000 people.

“The biggest challenge is that we potentially lose one of the components of the cluster,” Mr Meadows said. “It raises a question about whether the open access will still exist for the chip fabrication part of the process.”

This week it emerged that Newport Wafer Fab had been involved in more than a dozen publicly-backed projects, including a collaboration with defence companies.

Ruth Jones, the MP for Newport West, has asked the Government to outline a deadline for reviewing the deal. "It’s important that we know what the timescales are, because the workers want job security," she said. 

Nexperia has said it will protect the 450 jobs at the plant.