Largest UK microchip plant to cut 100 jobs, UK Government ruling blamed

The largest microchip plant in the UK is set to lose 100 employees, with UK Government restrictions blamed for the proposed losses.

Nexperia Newport, based in Wales, was ordered by UK ministers to sell its 86% stake in the microchip plant due to national security concerns.

The UK Government activated the National Security and Investment Act to overturn a deal that would have seen Chinese-owned Nexperia take sole ownership of the plant in 2021. The security risks were said to ‘undermine UK capabilities’ in producing semiconductors and could facilitate foreign access to technological expertise and know-how.

Nexperia planned to make the plant, previously known as Newport Wafer Fab, ‘fit for the future’ by introducing new technologies and products. These investment plans have since been cancelled.

“We currently see no other option than to reduce the number of employees in Newport as the increased size of the workforce was dependent upon the terminated investment plans,” said Nexperia in a statement.

Nexperia also cited semiconductor market weakness that began in Q4 2022 as a factor in the proposed job cuts. The plant currently employs approximately 600 people.

Staff numbers return to 2021 levels for UK microchip plant

The job losses will take staff numbers back to 2021 levels when the plant was acquired by Nexperia to save it from bankruptcy. Initially holding a minority stake in 2021, Nexperia invoked a clause to acquire the plant for £63 million ($79 million) when the facility failed to meet customer orders.

“When Nexperia first acquired the Newport site, we saw a strongly positive long-term future for its highly skilled people,” added Nexperia.

The company said it will take ‘many months’ until the plant’s future becomes clear, as a judicial review to potentially overturn the Government’s decision is ‘disappointingly slow’.

“Continuing to explore a potential sale of the site, as directed by the Government, is also likely to take many months,” added Nexperia

Last year, Nexperia appointed an advisory firm ATREG to advise on a possible sale of the facility.

Wales rallies for semiconductor development

The Welsh Government has called on the UK Government to treat the sale of the plant as a ‘critical priority’.

“This announcement from Nexperia is extremely worrying and will come as a body blow to its talented workforce in Newport,” said a spokesperson for the Welsh Government.

The semiconductor industry was described as a ‘great success story for the Welsh and wider UK economy’.

“It is critical that any new owner of the business has the means and intention to invest in the site as soon as possible. Meanwhile, the Welsh Government will provide assistance and support for all employees affected,” added the spokesperson.

A UK Government spokesman said they understand this is a ‘concerning time’ for workers at Newport plant.

The Welsh Government is concerned about the tech industry in Wales and keen to further develop the region with companies who are investing in the cluster.

“The Secretary of State for Wales and other Ministers in Westminster must now come to the table with a proper strategy for the industry and work with Welsh Government, to ensure it has a strong future,” said Newport MS John Griffiths.

Image credit: Nexperia

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