What are the ambitions behind the 100 billion semiconductor giant’s acquisition of British NWF?

Nowadays, chip production capacity is everything. If this acquisition is successful, Wingtech will be expected to share a bigger cake in the global semiconductor market.

For the long-term development of China’s semiconductor industry, the support of such powerful companies has a good foundation for research and development and production of Chinese chips.

Wingtech’s wholly-owned acquisition of NWF, the largest chip manufacturer in the UK

On the evening of July 5, Wingtech, a leading 100 billion semiconductor company, announced that it had acquired the largest British chip manufacturer Newport WaferFab. Previously, market rumors that the purchase consideration was 63 million pounds (approximately RMB 564 million).

According to the announcement, on July 5, Anshi Semiconductor and NWF parent company NEPTUNE 6 LIMITED and its shareholders signed a relevant acquisition agreement.

After the completion of this transaction, Anshi Semiconductor will hold 100% equity of NEPTUNE and hold 100% equity of NWF through NEPTUNE. After the acquisition is completed, NWF will be renamed Nexperia Newport.

Under the background of the global automotive chip shortage, Wingtech needs to continue to lay out the chip industry chain.Although the size of NWF is still small and its impact on Nexperia and Wingtech is very limited, the acquisition of NWF will be a Chinese-funded company to build the chip industry. An important step in the chain.

Moreover, Wingtech, Anshi Semiconductor and NWF may receive review notices from government agencies such as the United Kingdom, the United States, and the European Union before completing the acquisition.

What are the ambitions behind the 100 billion semiconductor giant’s acquisition of British NWF?

The main reason for acquiring NWF at this time

① The relationship between NWF and NWF is very close, with both sales relationship and shareholder binding. NWF is one of the important customers of foundry services provided by NWF.

In 2019, Nexperia signed a non-exclusive global fee-based patent license agreement, and Nexperia obtained Cree’s patent portfolio for gallium nitride power devices. Good and close investment and manufacturing relationships make it easy for both parties to acquire.

②Anshi Semiconductor is a semiconductor company under the IDM model, but the biggest drawback of the IDM model is that it is not professional enough to meet the needs of customers for advanced semiconductor technology, which will have a significant impact on the future growth of the company.

Anshi has formulated a long-term growth plan, and the addition of the NWF Xingang plant will help meet the global market demand for semiconductors, and it can play a vital role in ensuring the continuity of supply.

③NWF claims to be the largest chip company in the UK, but it is not ranked globally. NWF was founded in 1982 and is located in Newport, South Wales, UK. Its factory covers an area of ​​28 acres and mainly produces 8-inch wafers, with a wafer capacity of 32,000 to 44,000 wafers per month.

Although it is small in scale, NWF has been in the chip field for 30 years and has accumulated a wealth of expertise in the fields of analog circuits, advanced power semiconductors, and compound semiconductors. The cost of acquiring such a small and sophisticated enterprise is not high and it is relatively easy.

④NMF’s operating conditions are not good. The data shows that in 2020, NMF will have a revenue of 275 million yuan and a net profit of -166 million yuan, which is at a loss.

NMF also owed a lot of debts outside, such as 20 million pounds owed to HSBC and 18 million pounds to the Welsh government. The loss-making business situation also gives outside investors an opportunity to take advantage of.

⑤This transaction will maximize the interests of both parties. If the acquisition of NWF is successful, Anshi Semiconductor’s 8-inch production capacity will further achieve rapid growth, and the parent company Wingtech Technology will further exert its strength in the moat.

The acquisition of a loss-making NWF has been well thought out

Through this acquisition, Anshi Semiconductor will obtain 100% ownership of the Welsh semiconductor silicon chip production plant, which will continue to occupy an important position in the Welsh semiconductor ecosystem, leading the technology research and development of the Newport area and other factories in the region.

An industry consensus is that after the completion of the NWF acquisition, Wingtech’s closed-loop industrial chain in design, manufacturing, packaging and testing will accelerate the formation.

But NWF does not seem to be particularly profitable. The financial report shows that the company’s net loss in 2020 will reach 18,611 thousand pounds, or about 1.6 trillion yuan.

After the completion of the transaction, with the help of NWF’s 200mm wafer fab to develop high-end silicon devices expertise, Nexperia will further increase production capacity and help the company achieve more ambitious growth goals and investments.

And Anshi has its own plans to acquire NWF. The purpose may not be mobile phones. You must know that NWF mainly produces power chips for automobiles. This type of chip is now one of the most valued chips in the world market. Anshi thinks Use NWF’s existing technology to produce the required chips to achieve the desired benefits.

The acquisition of the ownership of the Newport fab, coupled with the investment in 200mm wafers in the Manchester and Hamburg fabs, will help Nexperia achieve its strategic growth goals and enrich its IGBT, analog and compound semiconductor product lines.

In addition, this acquisition will also significantly enhance Nexperia’s ability to supply products that meet vehicle-level standards and expand market share.

The addition of Nexperia Newport will effectively enhance Nexperia’s IDM capabilities in automotive-grade IGBT, MOSFET, Analog and compound semiconductor products.

The chip market is facing a huge production gap, and Wingtech hopes to increase production capacity and participate in competition in a broad market.

It just so happened that NWF, the largest chip manufacturer in the UK, began to decline. At this time, Wingtech’s subsidiary Anshi Semiconductor participated in the takeover, which was considered a bargain.

And through this acquisition, Anshi has also gained a reputation in the world. Everyone wants to see how Anshi uses the newly acquired NWF to turn losses into profits and take Anshi to a higher level.

What are the ambitions behind the 100 billion semiconductor giant’s acquisition of British NWF?

The U.S. and U.K. government’s stance will remain the key

Tom Tugendhat, the head of the “China Research Group” of the British government and chairman of the Special Committee on Foreign Affairs, tried to use “national security” as an excuse to intervene in the acquisition of NWF.

Tugendhat stated that the acquisition of NWF by Nexperia does not comply with the National Security and Investment Act promulgated by the United Kingdom in April, and it involves high-end technologies such as chip manufacturing that threaten national security and should be stopped.

A person familiar with the matter stated that the British government should intervene in the acquisition and obtain at least $1 billion from it.

Taking into account that the Chinese-funded company Zhilu Capital planned to acquire South Korean chip manufacturer Magna Semiconductor at a price of 9.2 billion yuan and was interfered by the US government, the US and British governments’ statements will remain the key to this NWF acquisition.

Since the British government has made a statement that it will not prevent it from the beginning, it shows that the risk of this acquisition is not big. Therefore, Johnson did not restart the review out of his heart, but made a compromise with the parliament.

This sends a signal that after Brexit, Britain is more inclined to develop closer cooperation with China in the economic and financial fields.

This kind of attitude in politics and military, and an attitude in economics and trade can be regarded as an old method commonly used by Britain.

Therefore, taking the NWF acquisition as a starting point, China and Britain will certainly deepen cooperation in trade and finance in the future.

Against the background that the Sino-European trade agreement is expected to advance, Britain is actively showing its favor to China. Its fundamental purpose is to target China’s vast market.

end

To break the monopoly of Europe and the United States in the analog chip industry, acquisition is obviously the best and fastest way.

Wingtech is an early adopter of China’s chip industry. It has acquired a place in the global analog chip market through the acquisition of Anshi Semiconductor.

If the acquisition of NWF is successful, it will further break the monopoly of European and American companies in the analog chip market in the high-end analog chip market.

Part of the information reference: Titanium Media APP: “Chinese-funded enterprises confirm the acquisition of the UK’s largest semiconductor fab, and the British government expresses its close attention”, 21st Century Business Herald: “It’s set! Chinese semiconductor giants will take the initiative to win the UK’s largest chip manufacturer”, Sina Finance: “564 Million? Wingtech’s subsidiary, Anshi Semiconductor, successfully acquired the UK’s largest chip manufacturer NWF”, Beijing News: “Where is the confidence of Wingtech’s large-scale acquisition of the British semiconductor factory with huge debts?” Finance Writer: “Is the acquisition of the UK’s largest chip factory overwhelmed?”

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