News & Analysis

Chinese buyer swoops in on tech firm with most short-sold stock of 2018

Andrew Saks, Tuesday, 6 July 2021

When thinking of the extremely advanced technology which comes from the innovative island of Great Britain, images of Central London's financial center and its glass towers, and the huge software and computer science centers of Cambridge and the Thames Valley Park in Reading are often conjured up.

There is, however, another area of computer science and technology that Britain has majored in for many years, and that is the hardware and silicon chip industry, which is quite simply huge.

Chips and hardware are dying out, I hear you say. Well, that may be the case in many individual offices which have switched to cloud hosting, but where does the cloud hosting sit? There are still more and more datacenters and vast corporate mainframe systems, and all rely on semiconductors, as do consumer durables that are hardware dependent such as televisions, car computers, smartphones, medical equipment, and home appliances among many.

Far from the software centers of the surrounding areas of London, and across the Severn Bridge in South Wales lies a long-established and enormous technology company that has produced these important chips for 40 years.

Today, however, the end of an era has come about, as the Newport Wafer Fab division of the company has been sold to a Chinese entity.

Newport Wafer Fab is a division of IQE PLC, which is the largest independent outsource producer of epitaxial wafers in the world and has been a mainstay of British computer science and one of South Wales' post-coal mining regeneration successes since it was established in 1982 under its original name, INMOS.

The buyer is called Nexperia, and is a Chinese-owned former standards division of NXP. This complete acquisition was perhaps on the cards for the past two years, as Nexperia has been Newport Wafer Fab's largest shareholders since 2019.

IQE stock has absolutely tanked this morning, and is down 0.25 points to 49.5p per share, and is very low compared to its five-year average, during which a growth period had emerged in late 2017, leading to an overall rise of an impressive 33 points, which is a staggering 200% rise when looked at across the entire 5 year period.

Perhaps losing the ownership of such an important semiconductor manufacturer in the Western World was a contributor, especially considering that the Asia Pacific region is home to the largest producing nation in semiconductor manufacturing, that being China, followed by Taiwan.

Taiwan's printed circuit board and semiconductor industry represents 12% of all global manufacturing, and mainland China produces 50% of all printed circuit boards and semiconductors.

Perhaps the most interesting point relating to IQE stock is that it was London Stock Exchange's most short-sold stock during 2018, a year during which its value was at a high point, contributing massively to its overall massive increase in value over the last 5 years.

Originally, during its pioneering days under the INMOS banner, Newport Wafer Fab had several owners. In 1984, Thorn EMI bought INMOS and in 1989 Thorn sold the company to ST. Then a bit later in 1999 a management buy-out resulted in the factory being renamed European Semiconductor Manufacturing which went into administration and the fab was sold to International Rectifier in 2002.

Infineon took over IR in 2015 and announced its intention to sell or close the Newport fab, and now here we are, and another Western piece of family silver has fallen into Chinese hands.

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