Amid chip issues, Nexperia increases stake in Newport to 100%
Amid a global unmitigated chip shortage, Nexperia, a semiconductor company owned by Chinese company Wingtech Technology Co Ltd, on Monday confirmed its outright acquisition of UK-based chipmaker Newport Wafer Fab , of which it is the second shareholder since 2019.
Acquisition of 100% Stake Grows in Significance as Global Tech, Auto and Appliance Markets, Including China, Face Severe Semiconductor Shortage .
Nexperia and Wingtech both confirmed the takeover on their respective websites, saying Newport will help boost production and meet growing demand for chips.
Chipmaker Wingtech’s notice to the Shanghai Stock Exchange, however, did not disclose financial details of the deal. Newport has a net loss of 18.61 billion pounds ($ 25.8 million) and negative net assets of 5.18 million pounds, Wingtech said.
If the total assets of a business are less than the total liabilities, the business is deemed to have negative net assets.
But, Nexperia said it was “very happy” to have Newport “as part of our global manufacturing footprint.”
Achim Kempe, COO of Nexperia, said in a press release: “Nexperia has ambitious growth plans and the addition of Newport supports the growing global demand for semiconductors.
Nexperia has been a client of the foundry services offered by Newport. The Newport site complements Nexperia’s other European manufacturing operations in Manchester, England, UK, and Hamburg, Germany.
Once the deal is formalized, Newport will be renamed Nexperia Newport, Wingtech said.
Newport is capable of manufacturing power integrated circuits and compound semiconductors on 200mm diameter wafers. It has a capacity of 35,000 wafers per month. Its products can be used in power supply applications for the automotive industry, which is particularly affected by the shortage of chips.
The severity of the global chip shortage has increased a notch since the outbreak of COVID-19. From Samsung to LG, big tech companies have admitted that the shortage is slowing the production of TVs and home appliances.
Semiconductor companies have few options for quick troubleshooting, according to an analysis by Bain & Co, making it increasingly likely that the shortage will continue into 2022.
Peter Hanbury, Partner at Bain, said: “For example, semiconductor manufacturers can increase the utilization of their factories to maximum capacity in order to increase production by a few percentage points, but production times may increase. will suffer from three months to six months. “
The auto industry may be more vulnerable than consumer electronics due to lower bargaining power and lower inventory, Hanbury noted.
The industry alone is likely to lose $ 6 billion this year due to chip issues, he said.
Some analysts say they are more cautious about the takeover of Newport by Nexperia.
Han Feng, analyst at Chinese media outlet Wallstreet CN, said that even if Newport’s capacity were increased based on investment plans announced earlier this year, it would only be comparable to the production capacity of peers such as China Resources Microelectronics.
“The silicon chips produced by Nexperia should require strict authentication. It normally takes at least two years for products to be delivered to customers, ”Han said.
“And we should not ignore Newport’s unpaid debts which will be paid off after the sale, which could keep the profitability of the parent company in limbo,” Han added.
Earlier this year, Nexperia announced that it would invest 12 billion yuan ($ 1.85 billion) to build a new 300 mm (12 inch) power semiconductor wafer manufacturing plant in Lingang, in Shanghai.
The proposed plant is expected to start operations in 2022 with an estimated annual production of 400,000 wafers.