The Secretary of State called in Nexperia’s 100% acquisition of Newport Wafer Fab, a semiconductor manufacturer in the South Wales Cluster and has ruled that Nexperia, which is Chinese controlled, must divest 86% of that shareholding on the grounds that there is a risk to national security that relates to:
- technology and know-how that could result from a potential reintroduction of compound semiconductor activities at the Newport site, and the potential for those activities to undermine UK capabilities; and
- the location of the site could facilitate access to technological expertise and know-how in the South Wales Cluster (“the Cluster”), and the links between the site and the Cluster may prevent the Cluster being engaged in future projects relevant to national security.
The second limb of the decision illustrates the effect of the NSI Act on property transactions. Whilst we have not seen the evidence to support the second reason given, it can be inferred that given the activities of Newport Wafer Fab at the site there was seen to be a risk that other businesses in the vicinity may be prejudiced by its presence on the site either through the risk that intelligence may be more easily be obtained or possibly also a risk that their businesses may be interfered with in some way. The consequence of those risks was that this would prevent businesses in the Cluster ‘being engaged in future projects relevant to national security’.
Landlords and tenants operating tech-based industrial estates will need to heed the warning from this decision – choose your tenants carefully. The presence of a business that could prejudice the ability to do national security sensitive activities may mean you may limit the scope of other potential tenants. Whilst the Government promised that land transactions would be called in ‘very rarely’, it is not altogether surprising that they seem to have realised that location, and who owns the location, are important!