Nexperia’s Toni Versluijs takes questions on the Newport deal
It’s been a hot topic throughout 2021 with the acquisition coming under political scrutiny because Nexperia is wholly owned by Chinese company Wingtech, which is itself building a 300mm wafer fab at its base in Shanghai. UK prime minister Boris Johnson spoke about the Newport acquisition and called for it to be investigated.
Newport Wafer Fab had been reconstituted in 2017 as the foundry and development center for a south Wales cluster of compound semiconductor excellence. It appeared to have been making good progress as part of UK strategic technology initiatives.
And then Nexperia went from being a customer and minor shareholder of Newport Wafer Fab to the owner in the 1H21 at a time when the strategic significance of semiconductors was often in the news due to shortages of chip supplies at various manufacturing sites.
But in any specific case the devil is in the detail and Versluijs sat down to take questions about the Nexperia-Newport deal.
We started by asking what was the significance and impact of Nexperia appointing two nominees to the board of directors of Newport Wafer Fab Ltd. back in March 2021.
“We had an agreement made back in 2019 that Nexperia would load Newport Wafer Fab [with orders for chips] but if certain conditions were not fulfilled we would have the right to appoint directors. Those conditions arose. The major one was that it looked as if NWF would not deliver the capacity we had agreed. The second was financial. It looked like NWF might not be able to exist much longer.”
Back in January 2021 Newport Wafer Fab was reportedly seeking funds to expand manufacturing capacity (see Newport Wafer Fab seeks funds for capacity expansion).
Next: Multi-year R&D
We then asked if it was the case that having nominated two directors it was easier to vote through a plan for Nexperia to buy the company? Versluijs pointed out that directors, however their appointment comes about, are obliged to act in the interest of the shareholders of the company they are directors of. “The solution we proposed – acquisition – was the best scenario going forward.”
There is a list of around 20 multi-year R&D projects that NWF was acting as a manufacturing site for. These projects encompass a variety of materials and are with several different academic and commercial partners. These included silicon photonics, silicon-carbide, GaN-on-Si for RF, for power and for LEDs and GaN-on-SiC.
Is that research roadmap and Newport’s role as foundry hub now in jeopardy?
“We are continuing the projects. We will respect the contracts. We have offered to continue all of them. It is up to the cluster partners,” said Versluijs. “The second thing we have done is agreed with the seller that he will be put in a position to start a new wafer fab for compound semiconductors and photonics; to pick up some of the contracts.”
It was previously reported that there may be the opportunity for UK-owned production in an empty building on the Newport Wafer Fab campus, which is now the Nexperia Newport campus (see China’s Nexperia buys Newport Wafer Fab amid concerns).
“We are in discussions on whether that takes place. We can’t be sure this is going to be achieved as a fact.” Such as facility would share infrastructure with Nexperia Newport.
Next: Time is of the essence
It is the case that a new company called NWF 10 Ltd. [or Newport Wafer Fab 10 Limited] was registered with Companies House on July 5, 2021, with Drew Nelson, CEO of wafer supplier IQE plc, as the sole director. That was the same day that Drew Nelson and others stood down as directors of Newport Wafer Fab Ltd. The number 10 in the new company title is believed to refer to the Fab 10 building otherwise known as the Richard Rogers Inmos building.
Nelson plans to step aside from his current role as CEO of IQE, once a successor has been found. He has also said he plans to spend more time on the development of the compound semiconductor cluster in south Wales (see IQE boss to step down).
But surely bringing up a new fab and a new company in an empty shell will take at least 12, if not 18 months?
“It will require effort. It will require some refurbishment. It will require the acquisition of equipment,” said Versluijs. But he loops back to state that Nexperia is providing a transition by honouring present R&D contracts. “As to new projects will take a look and judge them on their merits.”
But Versluijs is keen to point out that Nexperia’s interest in Newport was, and remains, in volume production of discrete power MOSFETs. “That has not changed at all. The compound-semiconductor R&D is something that came with the factory. That said, Nexperia was one of the R&D partners working on GaN-on-Si for power semiconductor applications.
“We want the cluster to succeed. NWF10 coming into operation is the best way forward. We believe this is a very elegant way to support the compound semiconductor cluster. It’s the most logical way forward.” He said that the plan is looking promising: “There is definitely momentum behind the NWF10 idea.”
Nonetheless Newport Wafer Fab had numerous partners in R&D some of whom were also looking to becoming customers, moving into pilot production at the fab. If that faces uncertainty around a wait on bringing up NWF10, won’t they go elsewhere? (see Rockley signs up to use SkyWater BEOL). There were also customers using Newport Wafer Fab as a foundry.
Versluijs answered: “The customers were in various stages of maturity. We have respected all agreements. For some customers things do not continue. Where wafer fab capacity is tight there is a fight for capacity. We face that ourselves when dealing with our foundry suppliers. Some customers were on a PO [purchase order] basis.”
He added: “Nexperia Newport isn’t a foundry. Nexperia bought the factory to be a volume producer.”
Versluijs continued: “We have said we will invest $50 million (about £40 million) on top of the [undisclosed] purchase price into Newport and we are investing similar levels in our Hamburg and Manchester fabs.”
In Newport, the money will be used to boost manufacturing capacity for powerMOS discretes. Nexperia has also given the staff at Newport a pay rise of 2.5 percent, Versluijs said. “It would make sense for Nexperia to start product development in Newport,” Versluijs added saying that would likely increase employment at the facility.
Meanwhile the UK government is conducting a retrospective investigation into the acquisition. Could Nexperia be compelled to sell Nexperia Newport to some sort of ‘white knight’ consortium?
“Newport Wafer Fab is not for sale. We’ve finalized all the details. The UK government will make the assessment in the appropriate way. I am confident it will make a fact-based decision,” said Versluijs.
Versluijs would not be drawn on whether Nexperia could provide financial support to a separate R&D wafer fab within the Nexperia-Newport campus but he said: “We are willing to help start NWF10. We are willing to give the transition time. We can work something out.”
By way of conclusion Versluijs said: “We are in Newport for volume. We are investing. We are not after ‘secret sauce’. We are eager to work with people in Newport to make the factory a big success.”
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