Biden Should Remove UK From CFIUS White List if It Approves Nexperia Deal, Republicans Say
The Biden administration should “employ all tools necessary” to stop Chinese-owned Nexperia’s acquisition of Newport Wafer Fab (NWF), a U.K.-based chip facility, the Republican-led China Task Force said in a letter to the White House released April 21. If the acquisition is completed, the U.S. should remove the U.K. from the Committee on Foreign Investment in the U.S. white list and impose strict export controls on shipments to NWF, the House members said.
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The lawmakers said Nexperia has “deep ties” to the Chinese government and could acquire sensitive semiconductor technologies by purchasing NWF, which has 400 “advanced technical personnel developing advanced Gallium Nitride light-emitting diodes and field effect transistors” and “next generation radio frequency monolithic microwave integrated circuits for radar and communications.”
This deal serves as a “critical test” for the U.K.'s new foreign investment screening regime (see 2111160043), and the U.K. needs to show its “willingness to exercise its new authorities to address a shared security concern regarding critical technology,” the China Task Force said. If the U.K. approves the acquisition, the U.S. should “call into question the fidelity of the UK’s entire review process” and consider removing the country from CFIUS’s excepted foreign states list (see 2002270049), a designation that reduces the likelihood that CFIUS will heavily intervene in deals from those countries. The U.K. is listed as a temporary excepted state and has until 2023 to meet certain investment screening criteria and continue to qualify for the provision (see 2201050039).
The lawmakers urged Biden administration members to “directly engage with their UK counterparts at the highest level to secure disapproval of this acquisition.” If “diplomatic outreach is unsuccessful,” the U.K. should “immediately reconsider the UK’s status on the CFIUS ‘whitelist,’" the letter said, and apply “targeted export controls” on NWF to make sure it can’t acquire “any U.S. origin tools, technologies, or software it needs to fabricate semiconductors.”
“The U.K. is a valued ally of the United States, and we hope it will decide to change course,” the lawmakers said. “Failing to object to this transaction would send a disastrous message to our friends and foes alike, and we look forward to supporting these efforts in any way possible.”
A White House spokesperson didn’t comment. A Nexperia spokesperson said any "suggestion" that it or its parent company, Wingtech, is owned by the Chinese government is "incorrect and not based on facts." The spokesperson also said the "Newport wafer fab is using mature semiconductor technologies for elementary chips with basic functions."
China-based JAC Capital and Wise Road Capital acquired Nexperia in 2017, later selling it to China-based Wingtech Technology, the lawmakers said. CFIUS recently blocked Wise Road Capital from acquiring South Korea-based Magnachip Semiconductor after the committee said it couldn't identify measures to mitigate the deal’s national security risks (see 2112140011).