Government advisers have pushed back a security review into the Chinese-backed takeover of Britain’s biggest microchip plant, raising the prospect that it could be blocked under new legislation.

Sources close to the £63m takeover of Newport Wafer Fab said that a review ordered by Boris Johnson was unlikely to report before January, when updated national security laws come into force.

The Government recently wrote to MPs saying the review remained ongoing, more than four months after it was ordered by the Prime Minister.

On January 4, the Business Secretary will be granted expanded powers to intervene in foreign takeovers considered a national security risk, which could allow the deal to be reconsidered.

Nexperia, a Dutch microchip company owned by China’s Wingtech, took over Newport Wafer Fab in July after exercising a contractual right to acquire the facility.

Kwasi Kwarteng, the Business Secretary, declined to intervene after receiving advice that it did not represent a security risk. Newport Wafer Fab does not meet revenue criteria for intervention under current national security laws.

However, the new National Security and Investment Act will expand the scope of deals that can be reviewed and can be applied retrospectively, meaning ministers could unwind the deal if it is deemed a risk.

Newport Wafer Fab produces the silicon wafers on which semiconductor circuits are printed, and is the biggest facility of its kind in the UK.

Ron Black, the former head of Imagination Technologies, has said a consortium of investors is willing to take over and upgrade the plant with an investment of up to £300m

Credit: David Rose

The sale has raised concerns over the future of a cluster of semiconductor firms in south Wales that were expected to rely on the company to produce a new generation of high-tech “compound” chips.

Considering the deal under the new legislation could be a test case of how far the Government is prepared to intervene in foreign takeovers for security reasons.

While the factory is believed to have little in the way of sensitive intellectual property, MPs have called for it to be scrutinised amid a global shortage of microchips.

Ron Black, the former head of British microchip company Imagination Technologies, has said a consortium of investors is willing to take over and upgrade the plant with an investment of up to £300m.

Last week, the Foreign Affairs Select Committee published correspondence from ministers saying the review was ongoing and that “the Government does not and will not prioritise short-term commercial interests over national security considerations”.

The Department for Business did not comment. It has said it is prepared to take action if needed.