WASHINGTON, DC – Representative Mike Gallagher (R-WI) and China Task Force Chairman Michael McCaul (R-TX) led other China Task Force members to send a letter to President Biden urging his administration to pressure the UK government to prevent a Chinese company from buying a UK semiconductor factory.
“The UK government recently created an investment review regime under the National Security and Investment Act to provide oversight and review of precisely this type of transaction,” the lawmakers wrote. willingness to exercise its new powers to address a shared security concern regarding critical technology. Since the CFIUS “whitelist” was established on the assumption that exempt countries would maintain their own equivalent investment guarantees, any endorsement of the NWF agreement would necessarily call into question the fidelity of the entire investment process. UK review.
The letter was also signed by Reps. Michael Waltz (R-FL), Guy Reschenthaler (R-PA), Robert J. Wittman (R-VA), Neal Dunn (R-FL), Mark Green (R-TN) , Diana Harshbarger (R-TN) and Young Kim (R-CA).
The full text of the letter is available here or below.
Dear President Biden,
We are writing to express our concern over the potential takeover of Newport Wafer Fab (NWF) by Nexperia, an entity with close ties to the People’s Republic of China (PRC). This issue requires urgent action, and we urge your administration to use all necessary tools to prevent this outcome, including engaging in direct diplomacy with the UK government, reconsidering the UK’s status on the Committee on Foreign Investment in the United States (CFIUS). and restricting exports to NWF.
In July 2021, Nexperia, with the backing of PRC state funds – Wise Capital and JAC Capital – announced that it would acquire NWF, a British semiconductor chip factory. The facility has 400 advanced technicians who develop advanced gallium nitride (GaN) light-emitting diodes (LEDs) and field-effect transistors (HEMTs), next-generation monolithic radio frequency (RF) microwave integrated circuits for radars and communications, and works with the UK. Advanced Propulsion Center.1 The acquisition would also give the PRC access to the semiconductor research the company conducts with UK universities.
Nexperia is actually a public company in the PRC. In 2015, as part of its competition review of Dutch company NXP’s acquisition of US company Freescale, the PRC government forced the sale of NXP’s RF power business to JAC Capital, a company controlled by the State Council of the PRC.
In 2017, JAC Capital and Wise Road Capital – which CFIUS blocked from acquiring publicly traded US semiconductor maker Magnachip in 2021 – completed the acquisition of Nexperia from NXP. In 2018, Wingtech of the PRC acquired control of Nexperia.3 The PRC government owns at least 30% of the shares of Wingtech.4
The UK government recently created an investment review regime under the National Security and Investment Act to provide oversight and review of precisely this type of transaction. The PRC’s attempt to acquire NWF serves as a critical test of the UK’s willingness to exercise its new authorities to address a shared security concern over critical technology. Since the CFIUS “whitelist” was established on the assumption that exempt countries would maintain their own equivalent investment guarantees, any endorsement of the NWF agreement would necessarily call into question the fidelity of the entire investment process. UK review. We therefore urge your administration to engage directly with their UK counterparts at the highest level to secure disapproval of this acquisition.
If diplomatic steps fail, we urge your administration to:
1. Immediately reconsider the UK’s status on the CFIUS “white list” for failing to protect critical national security technologies; and
2. Apply targeted export controls on NWF to ensure it cannot acquire US-sourced tools, technology, or software it needs to manufacture semiconductors.
The United Kingdom is a valuable ally of the United States and we hope that it will decide to change course. It is in the long-term interest of both our countries to ensure that the PRC cannot take control of any segment of the critical supply chains such as semiconductors, especially when located on Allied soil. Failure to oppose this transaction would send a dire message to friends and foes alike, and we look forward to supporting these efforts in any way we can.