On the evening of July 5, Wingtech Announced that nexperia B.V., a wholly-owned subsidiary of Nexperia, has signed an acquisition agreement with NEPTUNE 6 LIMITED ("NEPTUNE 6"), the parent company of Newport Wafer Fab, the largest chip manufacturer in the United Kingdom, and its shareholders. Upon completion of the transaction, Nexperia will hold a 100% stake in NEPTUNE and a 100% stake in Newport Wafer Fab through NEPTUNE.
Achim Kempe, Chief Operating Officer of Nexperia, said: "We are delighted to expand our global manufacturing operations to Xingang. Nexperia has ambitious growth plans, and the addition of the Xingang plant will help meet the growing global demand for semiconductors. The Xingang facility has a highly skilled operations team that plays a vital role in ensuring supply continuity. We look forward to building a better future together. ”
Dr Paul James, Managing Director of Newport Wafer Fab, said: "This acquisition is good news for the staff at the Xingang plant and the wider business district across the region, as Nexperia is investing heavily in increasing production capacity to ensure long-term stability in the future. We look forward to being part of Nexperia's global team and want to retain our existing workforce and expand it as needed." We are also excited to continue to contribute to the local semiconductor ecosystem." ”
However, in the announcements of Wingtech Technology and Nexperia, no specific purchase price was announced, and according to previous foreign media reports, the purchase price was 63 million pounds (about 564 million yuan).
The current production capacity is 32,000 8-inch wafers per month, mainly producing automotive chips
According to the data, NEPTUNE's main asset is the 8-inch fab Newport Wafer Fab, located in Newport, South Wales, which was built in 1982 and is the largest remaining semiconductor factory in the UK.
Chip Intelligence found that the earliest fab was established by microprocessor manufacturer Inmos, and then the fab was acquired by Thorn EMI in 1984; Thorn sold it to STMicroelectronics (ST) in 1989; in 1999, the fab management redeemed from ST, and the fab was renamed European Semiconductor Manufacturing Company; in 2002, the fab was sold to International Rectifier Corporation (IR) in the United States, becoming IR Newport Infineon acquired IR in 2015 and announced its intention to sell or close the Newport fab; in 2017, the BRITISH private company NEPTUNE 6 reached an agreement with Infineon to acquire the Newport fab and rename it Newport Wafer Fab. Infineon also signed a two-year supply agreement with NEPTUNE 6 at that time, ensuring a smooth transition to each other.
According to the official website information, the current monthly production capacity of Newport Wafer Fab is 32,000 pieces of 8-inch wafers, and the maximum production capacity can be expanded to 44,000 pieces of 8-inch wafers per month, mainly engaged in the manufacture of semiconductor chips in the process of 0.18 μm-0.7 μm, and the main products are MOSFET, IGBT chips, as well as CMOS and analog chips used in the automotive industry. In addition, Newport Wafer Fab has the ability to develop compound semiconductors, primarily SiC and GaN.
It should be known that at present, Nexperia's own fabs do not currently have the production capacity of IGBT chips. Therefore, the successful acquisition of Newport Wafer Fab will help Nexperia further extend its product line, further enrich the supply capacity of automotive chips, and increase market share.
Nexperia also said in the press release that the Newport Wafer Fab plant, coupled with its current 200mm wafer investments in Manchester and Hamburg fabs, will help Nexperia achieve its ambitious strategic growth goals and diversify its product line of IGBT, analog and compound semiconductors. In addition, the acquisition significantly increased Nexperia's ability to supply automotive-grade products and expanded its market share.
It should be pointed out here that there were previous rumors in foreign media that Newport Wafer Fab would divest the compound semiconductor business, but according to The Core Intelligence, the rumor is only a "rumor". And as can be seen from Nexperia's press release, the acquisition includes the compound semiconductor business.
At present, the third-generation semiconductor technology represented by SiC and GaN is highly sought after, with a wide range of applications and huge market potential. Newport Wafer Fab also currently has the ability to develop a new generation of compound semiconductors, namely third-generation semiconductors (mainly SiC and GaN).
According to the data, as early as 2002, after the establishment of IR Newport, the Newport fab became the R&D and manufacturing center of IR, launched most of the IR chips, and began the research and development of GaN technology.
In 2017, under the leadership of the Welsh government in the United Kingdom, the compound semiconductor cluster - "CS Connected" was established, bringing together Welsh local compound semiconductor companies, policy makers, universities, relevant scientific research institutions and scholars to jointly develop the next generation of compound semiconductor technology. Newport Wafer Fab is also a member of the group.
At the beginning of 2019, the European Commission approved investment in the third-generation semiconductor program, which will provide 1.75 billion euros in funding for research activities. The Welsh government has promoted the participation of three Welsh semiconductor companies in the Pan-European Joint Microelectronics Research and Innovation Project, including Newport Wafer Fab.
Nexperia's acquisition of Newport Wafer Fab will undoubtedly boost Nexperia's layout in the development and manufacturing of third-generation semiconductor chips.
Acquisition of debt containing €50 million?
According to wingtech's announcement, NEPTUNE 6 achieved operating income of 30.911 million pounds and net profit of -18.611 million pounds in the 2020 financial year. With total assets of £44.7076 million and net assets of £5.1773 million at the end of the financial year 2020, it is already insolvent. Liabilities could reach close to £50 million.
However, since the fourth quarter of last year, the global wafer manufacturing capacity is in short supply, especially the continuous shortage of automotive chip production capacity and price increases. As a result, NEPTUNE 6's performance in the first quarter of 2021 should have improved significantly. Previous liabilities may have been reduced.
According to the British "Daily Telegraph" report at the beginning of this year, in January this year, NEPTUNE 6 plans to raise 50 million pounds (about $68 million) of funds to expand Newport Wafer Fab's monthly production capacity by another 8,000 to 14,000 units.
Drew Nelson, chairman and CEO of NEPTUNE 6 at the time, said that in the past three months, chip demand has skyrocketed, mainly due to the global chip shortage and the rise of electric vehicles. Therefore, the newport Wafer Fab expansion was chosen to respond.
However, the expansion plan does not seem to have officially begun to be implemented, and it has begun to contact Nexperia for the acquisition.
According to previous foreign media reports, "Newport Wafer Fab still has outstanding debts, including 20 million pounds owed to HSBC and 18 million pounds to the Welsh government, which will be repaid after the sale."
Therefore, if Nexperia acquired NEPTUNE 6 for £63 million, it should inherit the £38 million debt. So the total actual expense of the acquisition could be £101 million, or about RMB776 million.
Is the purchase price cheaper or more expensive?
Although neither Wingtech Nortel nor Nexperia have announced the purchase price, it is tentative to use the previously rumored purchase price of £63 million as an estimate.
Earlier, foreign media reported that some local sources expressed dissatisfaction, saying that "it is the largest remaining advanced semiconductor factory in the UK, but the British government does not care about its fate." He added that they should at least try to get $1 billion out of it.
Apparently, the source was a bit of an international joke.
It should be noted that Texas Instruments' just won the Micron Utah 12-inch fab also spent only $900 million, and after the transformation can produce 65/45nm analog and logic chips. In contrast, Newport Wafer Fab is only an 8-inch fab with a relatively backward 0.18μm-0.7μm process and relatively limited production capacity.
So if Nexperia spends £63 million to buy Newport Wafer Fab, is it cost-effective?
As a comparison, we can use the case of SMIC's sale of LFoundry as a comparison.
In March, SMIC sold its stake in Italian fab LFoundry to Wuxi Tin Microchip Semiconductor Co., Ltd. for $113 million, corresponding to a total valuation of about $161 million, or about 1.042 billion yuan, for Afoundry. According to the data, LFoundry's 8-inch wafer production capacity is about 40,000 pieces per month, the scale is comparable to newport Wafer Fab, and the main production process is 150nm and 110nm process, which is slightly better than Newport Wafer Fab.
Taking the above 8-inch fab transaction as a reference, if Nexperia acquires Newport Wafer Fab for 63 million pounds (about 564 million yuan), it is obviously a good deal. Even with the total price of 101 million euros (about 774 million yuan) after adding the rumored 38 million euros of debt, LFoundry is still very cheap.
More critically, Newport Wafer Fab produces vehicle-grade MOSFETs, IGBTs and analog chips, which are more technical than ordinary 8-inch fabs, not to mention that Newport Wafer Fab also has compound semiconductor development capabilities. These are especially valuable for Nexperia, which is mainly focused on the automotive chip market.
In the current global wafer manufacturing capacity shortage, especially the shortage of automotive chips, Nexperia is also facing a situation of short supply of customer orders. To this end, in January this year, Wingtech Technology's controlling shareholders opened a 12-inch vehicle-grade semiconductor wafer manufacturing plant in Shanghai Lingang Area, with a total investment of 12 billion yuan and an estimated annual output of 400,000 wafers. Mass production is expected in the second half of next year. However, the so-called far water can not save the near fire, in order to increase production capacity faster, it is natural to directly acquire the fab with production capacity.
If the acquisition is successfully completed, it will undoubtedly quickly increase Nexperia's existing production capacity, accelerate product shipments, meet the needs of more customers, increase revenue and profits, and also help increase Nexperia's market share in the automotive chip market and accelerate Nexperia's layout in the field of IGBT and third-generation semiconductors.
For the parent company Wingtech Technology, the further strengthening of the semiconductor business will further increase its proportion in total revenue, which will help hedge the negative impact of the current chip shortage and price increase on its ODM business. In addition, due to the broad application prospects of third-generation semiconductors in consumer electronics, with the expansion of Nexperia's third-generation semiconductor business, it will also help to strengthen the synergy effect with Wingtech's ODM business.
Zhang Xuezheng, chairman of Wingtech Technology and chairman and CEO of Nexperia Semiconductor, said that Wingtech Technology will take Nexperia as the leader, increase investment, enhance innovation capabilities, empower components and system integration, comprehensively enhance the core competitiveness of complete machine products, and establish a company moat. Our goal is to promote Wingtech Technology's strategic transformation from a service company to a product company.
Editor: Xin ZhiXun - Langke Sword