CHINESE communications and semiconductor company Wingtech Technology Co. was told by the U.K. government Wednesday to undo its acquisition of Britain’s biggest microchip factory more than a year after the deal closed, citing national security concerns, according to reports by Sky News and Reuters.

Wingtech Technology’s Dutch subsidiary Nexperia Holding NV must cut its stake in the Newport Wafer Fab in Newport, Wales, now known as Nexperia Newport Ltd., by 86%, returning to its original holding of just 14% when it took over the company in 2021, according to the reports.

The acquisition of the Newport Wafer Fab factory had been investigated by the U.K. government over national security concerns, according to the reports.

The investigation took place under Britain’s new National Security and Investment Act, which grants power to the U.K. government to retrospectively intervene in a deal.

Nexperia had already completed its purchase of Newport Wafer Fab.

But the U.K. government said Wednesday there was a national security risk related to the technology and know-how which could result from compound semiconductor activities at the site, and the potential for those activities to undermine British capabilities.

Nexperia, which is headquartered in the Netherlands, said it did not accept the national security concerns raised and that two previous security reviews had found no national security concerns that would give reason to block the acquisition.

“We are genuinely shocked. The decision is wrong, and we will appeal to overturn this divestment order,” Toni Versluijs, Nexperia’s U.K. country manager, said in a statement.

Nexperia said 500 jobs in Newport are now at risk and it will challenge the order in an effort to keep the factory and jobs.                            (SD-Agencies)