back to article Nexperia calls in the lawyers to save Welsh chip fab deal

Blocked by the British government from acquiring Newport Wafer Fab — Britain's largest chip factory — Nexperia has solicited the help of US law firm Akin Gump in the hopes of overturning the ban. The hire comes just weeks after the UK secretary of state for business, energy and industrial strategy Grant Shapps unwound the deal …

  1. Pascal Monett Silver badge

    ASML

    It was very interesting to learn that this company is the only one in the world to make the equipment that actually makes chips.

    Intel, AMD, TSMC, Samsung et al, they all use ASML tools to make their chips.

    So cutting China - or anyone else - from accessing ASML tech is basically freezing them where they are in the tech tree.

    Not yet a death knell but, as far as militay stuff is concerned, close enough.

    1. botfap

      Re: ASML

      This is no longer true. Chinese company DongFang is making their own lithography equipment now (even if it probably is with IP stolen form ASML). While its still a few years behind ASML they are catching up quite fast. So much so that a few months ago SMIC started volume production of a new 7nm node based on DongFang equipment that is functionally the equivalent of TSMC's 7nm process. Not quite as refined yet but they will get there because they are putting the investment in. They have 5nm EUV nodes planned for Q4 2023 and 3nm nodes planned for late 2025. Thats probably optimistic timing but they will get there eventually

      We have been lazy in the west about this stuff, relying on a single company instead of creating a robust ecosystem. We assumed we were so far ahead that nobody else would ever catch up. The tortoise and the hare race with China has played out tens of times over the last 2 decades and the tortoise has always eventually come out on top because they actually invest and do, rather than embargo and sabre rattle

      1. katrinab Silver badge
        Meh

        Re: ASML

        As far as I’m aware, their 7nm is achieved by pushing DUV to its absolute limits, while TSMS’s is achieved using EUV which has a lot of headroom to spare.

        But that of course means that perhaps they use those techniques on EUV to achieve something better than TSMC?

        1. botfap

          Re: ASML

          TSMC's 7nm nodes (N7/N6) are not EUV, they are the last of TSMC's planned nodes built on the DUV process. TSMC didnt use EUV in production until the N5 nodes. Originally N6 was supposed to be on an EUV process but TSMC couldnt make it work in time and stuck to DUV for those nodes. There is a 7nm class TSMC node built on EUV called N7+ but that came after N5 was released

          SMIC / DongFang's N7 process is also DUV and is based heavily on TSMC's DUV tech. It was basically stolen from TSMC. DongFang also managed to get most of the info needed to reproduce TSMC's EUV process and most of the info needed to reproduce ASML litho tech but they are still a couple of years out from making that a high volume production process

          1. DS999 Silver badge

            Re: ASML

            Actually the original N7 was the only process in the N7 family to be DUV only. N7+ and N6 used a few EUV layers.

            1. botfap

              Re: ASML

              Yes they used EUV in a small part of the process but it wasnt the complete process as originally planned. Its still a DUV node with 3 layers processed with EUV

              1. DS999 Silver badge

                Re: ASML

                No one was ever talking about a wholesale move to EUV only in a single process generation. It makes no sense, since higher metal layers derive no benefit from EUV lithography. Even the latest processes on the drawing board like N2 aren't EUV only.

                N7+ was what TSMC had originally planned for N7 when they first announced it, but delays in EUV light sources bright enough for mass manufacturing and greater comfort with SADP/SAQP on DUV caused them to change course. That, and supposedly a push from their biggest customer (i.e. Apple) who did not want to risk any delays with N7 reaching mass production quantities.

      2. DS999 Silver badge

        Re: ASML

        As noted DongFang makes DUV equipment, which is older tech. There are multiple companies making that - Nikon, Canon, and some other company I can't remember the name of in addition to ASML. None of the others were willing to make the investments for well over a decade that were necessary to develop EUV.

        The only reason ASML was willing was because Intel, TSMC and I think other major fab companies made some equity investments in them to basically fund a lot of the required R&D.

        1. botfap

          Re: ASML

          DongFang is now also developing EUV thanks to info stolen from ASML. It doesnt have access to the latest ASML IP but it did have a lot of people inside ASML until mid 2021

          1. This post has been deleted by its author

          2. DS999 Silver badge

            Re: ASML

            Good luck with that, since EUV relies on hundreds of contractors all over the world who independently developed various building blocks EUV depends on, and many of which are also subject to the same export controls.

            It will take them a decade to put everything together to make it viable at production quantities, minimum. They could streal the blueprints to ASML's EUV machines and have a working model to dissect and it would still take them many years because almost none of the parts are off the shelf.

      3. Anonymous Coward
        Anonymous Coward

        Re: ASML

        Technology cannot be stolen, unless you physically remove the blueprints and kidnap the staff.

        The word you were looking for is "copied"

        The legal privilege of limited monopolies (patents and copyrights) is granted by the state - that is the Chinese government in this case (not the US government).

        It has always been subject to limits, including national security.

        If the US can legitimately (or not) claim national security as the reason to ban sale of equipment, the Chinese government can use the exact same reason to exempt any domestic manufacturers under the normal patent laws. The

        As soon as you refuse to supply, or even just threaten it once, you have also lost any and all moral right to restrict your customers from copying.

        We had a (US of course) company threaten not to supply our custom chips as a bargaining chip. I was on a plane to visit alternative chip suppliers, and start the process of designing a replacement within 48 hours. We didn't wait to see how the bluff would turn out - just one single threat to yank our short 'n curlies sent us straight out the door. When it takes years to replace something, you don't wait around to see how it is going to turn out. You get underway, and that means that in the long term they have absolutely lost the customer on the day the first threat was made.

        1. This post has been deleted by its author

      4. martinusher Silver badge

        Re: ASML

        Huawei has filed a patent for an EUV process a few days ago.

        EUV is an outstanding example of a build/buy tradeoff. If you look at a description of the process (search youTube -- asiaometry is a good one) you'll find its not so much a super-secret process that can only be done by this one company but rather there's more of an industry wide collaborative process to determine what form the technology would take and how it could be implemented. Its just too complicated to mass produce -- the EUV systems are as big as a bus and they have their own on-site operations and maintenance teams who are ASML employees -- so you could think of ASML as more the "company that all semiconductor manufacturers voted for as 'it' as the suppliers of this process".

        This sort of thing is far too subtle for the typical politician or civil servant to cotton onto. In their mind there's a set of blueprints and whoever owns the blueprints owns the process. There's no appreciation of the notion that "this stuff is so damned complicated we'll pay ASML to take care of it while we put our resources in other (equally complicated) parts of the process (the bits that differentiate us from our competitors)". Along comes Uncle Sam and like some country cousin stomps in, disturbing the build/buy tradeoff, so the company or country that's frozen out now has an incentive to develop the process themselves.

        (Common sense would also suggest that if I were a Chinese person I'd take what the US did to Huawei and other companies as a personal insult and I'd work 24/7/365 if need be to stick it to those arrogant SoBs)

        Anyway, the outcome's inevitable. They'll end up building a better mousetrap since they'll be able to learn from all the 'its works but could be better' compromises the first versions of products always have. (Google had better watch out for its Android platform -- HarmonyOS is likely to be better.)

      5. Youngone Silver badge

        Re: ASML

        We have been lazy in the west about this stuff, relying on a single company instead of creating a robust ecosystem.

        The West decided to do unregulated capitalism, so industries have become consolidated and competition is nominal in many of them.

        I for one find it very strange how free and open markets are suddenly not the best course of action. Maybe we've been lied to.

      6. TheInstigator

        Re: ASML

        Best excuse for bombing China back to the stone age, or turning the entire country into a nuclear wasteland that can be thoughr of

  2. elsergiovolador Silver badge

    Capmmunism

    Chinese "owned" companies are not really companies but Chinese government departments disguised as companies.

    There is no such thing as private ownership in China, at least not in the Western sense.

    Selling chip manufacturing de facto to Chinese government is madness.

    Of course China will put up a fight - anything that will cost us money and make us weaker.

    1. botfap

      Re: Capmmunism

      Completely agree. However we have gone too far in the opposite direction. Critical infrastructure like this SHOULD be invested in by the state for the good of our own economies. Our own governments in the west have watched this bottleneck approach for at least 10 years and done nothing to make the ecosystem more healthy and robust. Consequently we now have a defacto monopoly on advanced chip production in the west and the skyrocking wafer prices that go along with such monopolies

      1. Anonymous Coward
        Anonymous Coward

        Re: Capmmunism

        The problem of state owned companies, is that the Tories will sell it off cheaply, and then they will be a member of the board. That is, the Tories are corrupt and care not for the UK, only their own bank balance or their mates.

        The Tories are spivs. They don't care about the long term effects of what they do, as their approach is trying to make money from the next wheeze.

        Thankfully, crypto-currencies are failing, else the UK people would have been lumbered with debt due to their greed and corruption.

        So any investment by the Tories will be smoke and mirrors to make them look good, but will fail long term.

        1. Anonymous Coward
          Anonymous Coward

          Re: Capmmunism

          Tedious drivel.

        2. botfap

          Re: Capmmunism

          You never miss an opportunity to spout this kind of, unrelated to the post, political nonsense do you? Its bordering on deranged and Im a Labour voter nationally and a Lib Dem voter regionally. Almost all politicians in the west are terrible, shortsighted, incompetent, corrupt buffoons. Its not restricted to one party

          1. Anonymous Coward
            Anonymous Coward

            Re: Capmmunism

            The past 40+ years of when the Tories were in government proves my point admirably.

            I agree that Labour have been poor in the past, but not to the extent and damage the Tories wreaked, and plan do more too.

            At least with Labour we have the proposed Great British Energy to solve the crisis caused by the Tories greed an incompetence.

            Many European critical infrastructure is in government hands, just that the UK thanks to the Tories are as per the gripe in your post, been the problem.

            1. Anonymous Coward
              Anonymous Coward

              Re: Capmmunism

              Ah, but generating Great British Energy from unicorn farts paid for from magic money trees has it's own problems.

              1. Anonymous Coward
                Anonymous Coward

                Re: Capmmunism

                How is HS2 being paid for ?

                HS2 serves less than 1% of the UK population who commute daily etc., yet costing £100bn+ is acceptable to the Tories. There is always a magic money tree for Tory spivs and mates.

                GB Energy will cost a fraction of that, and provide much cheaper energy for the people, not exorbitant profit for Tory spivs at the poor peoples expense.

                1. Anonymous Coward
                  Anonymous Coward

                  Re: Capmmunism

                  HS2 isn't primarily aimed at commuters, it's intended to take cars off the roads, make it possible to get to/from the north, and ultimately from Scotland, quickly enough that people won't need to fly, etc. Like the French TGVs, it's complementary to commuter rail, and more environmentally friendly than other options.

                  It was also initiated by a Labour, not Tory, government.

                  1. Anonymous Coward
                    Anonymous Coward

                    Re: Capmmunism

                    The point you completely missed, is funding.

                    The magic money tree exists for the Tories when they want to give money to their mates, cronies, or family businesses etc.

                    When it comes to lies and corruption, absolutely no other political party compares to the Tories. To call all politicians as corrupt as the Tories is indeed drivel, and right wing propaganda to divert attention from Tory corruption.

                  2. rg287

                    Re: Capmmunism

                    HS2 isn't primarily aimed at commuters

                    It kind of is, but not in the way people think. As you say, HS2 displaces domestic aviation, but the real benefit is to the legacy network.

                    By removing non-stop services from the legacy lines, it's aimed at re-opening stations (or building new stations) - most people want to get from one side of Town A to the other, or not-quite-the-centre of Town A to not-quite-the-centre of Town B. You used to be able to do this with little local stations but these have been successively closed as rising line speeds blocked out local services which would impede non-stop express services. Our legacy network has 120mph trains blasting through small towns and villages, blighting them with noise whilst not actually serving them.

                    HS2 reverses this and rededicates the legacy lines to local and regional services. It allows the running of CrossRail or ThamesLink style services from Coventry to Wolverhampton through Birmingham using lines and platforms which are currently monopolised by long-distance London-Manchester/Glasgow services (which will now go into Curzon Street not New Street).

                    Of course it should have been an X-shape, with Curzon Street being designed as a through-station to allow a future South-Eastern leg to Bristol and Cardiff/Exeter. This would have made it a bit more obvious to the whiners that this isn't about "getting to London 5 minutes quicker" but overlaying the network with a new service type, which gets rid of the 120mph trains to which the legacy network is deeply unsuited.

                    It was also initiated by a Labour, not Tory, government.

                    It was, just barely - but in response to the Tories proposing it ~2008. Brown commissioned a study, which arrived early 2010. It had his name on but Cameron got to action it. So it's a cross-party project and everyone should be supporting it!

            2. Version 1.0 Silver badge
              Facepalm

              Re: Capmmunism

              It's always seems that Labour were working at trying to help everyone in the UK, a policy that has failed to get them elected by the majority of votes but their proposals generally don't seem as dumb afterwards as the Tories policies always seem to turn out to be - remember what everyone was saying about Brexit before the vote. I wonder if one day we will start to think that winning a general election is a fatal damage to the party that wins.

              1. Anonymous Coward
                Anonymous Coward

                Re: Capmmunism

                Labour were working at trying to help everyone in the UK

                Wow, you have been drinking the kool aid! With rare exceptions politicians work at helping themselves.

                winning a general election is a fatal damage to the party that wins.

                Only because reality bites, they find that they have overpromised, and we've noticed.

                1. Anonymous Coward
                  Anonymous Coward

                  Re: Capmmunism

                  Compared to the Tories, Labour are no where as corrupt as the Tories. Labour in general do try and help all.

                  To claim all politicians are equally bad, in the current climate since 2016 (Brexit) is just not true. The Tories have excelled at cronyism, corruption, lying, and right wing militancy. I have never known it so bad for the past 3 years. Even before Covid we had the Tories breaking international law in a limited and specific way. Then changing the rules to save Patterson, and removing critical wording to the code of conduct for MP's.

                  The Tory people i know would never behave as the current Tory MP's have.

                  1. Anonymous Coward
                    Anonymous Coward

                    Re: Capmmunism

                    > The Tory people i know would never behave as the current Tory MP's have.

                    It has gotten worse in the last few years and particularly since the brexit vote. It even makes me look back at the Thatcher years with a little nostalgia for better times.

                    Creaming off the top is one thing but every government project these days seems intended to siphon tax payer money into their bestest pals back pocket on the promise of a backhander.

                  2. Roland6 Silver badge

                    Re: Capmmunism

                    > I have never known it so bad for the past 3 years.

                    It got bad in the early 90's, to the point that the Grey Man did the honest thing and invited New Labour into Whitehall way ahead of the general election he knew he would loss. I expect the current Tories will do everything to deny a small transition of power, in the belief that they will win the general election...

      2. martinusher Silver badge

        Re: Capmmunism

        China's the size of Europe (including the Russian/Ukraine bit) and has 1.4 billion people. The idea that they're all puppets who jump when someone in Bejing pulls a string is ludicrous, it defies both logic and experience (do you even know any Chinese people?) The problem we have with China isn't that they're some kind of huge prison workshop but rather that the place is full of countless entrepreneurs, all looking to make a fast buck/yuan with a lot of them not being too picky about how they go about it. Its a highly productive society, one that eats at our leaders (and especially our bankers) because they'd like a big piece of the action but they're kept at arm's length by their government. They're just not interested in the majority of our financial services and they neither want nor need our lines of credit.

        As I remarked elsewhere we will rue the day that we needlessly awoke Chinese nationalism.

  3. Trigun

    I don't think trading with china is bad, but we shouldn't sleep walk into the CCP* (via it's puppet companies) digging it's claws further into western companies and/or infrastructure. Like many governments, the CCP isn't "nice" - they feel that they want to be top dog in the world (they deny it, but their actions say otherwise), and if they have to ruin other countries in the process then they'll happily do it and with few scrupples. A good example is the belt & road initiative and the dept that has incurred to various nations.

    We (the west) need to accept the CCP for what it is and act accordingly to protect ourselves and our interests in an effective and balanced (trade-wise) way.

    1. gforce

      Remember ... keep your friends close, but keep your enemies closer still.

  4. stiine Silver badge

    What about Japan?

    Isn't there a Japanese company with but a single facility that makes something vital to the chip industry?

    1. John Brown (no body) Silver badge

      Re: What about Japan?

      Vague memories of an earthquake and the sudden realisation that the only company making the special glue to stick the chip to the substrate was no longer producing that vital part of the process seems to ring a bell.

  5. Anonymous Coward
    Anonymous Coward

    waking up late

    some governments are waking up now to the fact that china has been at economic war with the world for over 30 years, and right now are buying their way into dominance in tech, to have inside access to their targets. I hope it never get to physical war. But I am glad to see governments waking up, sharing the actual concern and not making up petty trade excuses to prevent data control of the world by one dictator.

    1. Version 1.0 Silver badge

      Re: waking up late

      The Chinese entry into the tech world was driven by the American companies that started making a lot more money by moving their expensive production from America into the "cheaper" China.

    2. rg287

      Re: waking up late

      I hope it never get to physical war.

      It doesn't need to - certainly not from China's perspective. They have their 5/10/50/100 year plans and they just sit there quietly chipping away at it. Develop an industrial base making cheap low-grade items. Use that base to develop more sophisticated industries - if the Western corps send you some tech then so much the better, but that's a bonus. A little corporate espionage here and there. A couple of decades later and you're the world's manufactory.

      This steady and patient approach is quite apparent in their response to the invasion of Ukraine. Whilst they're not sanctioning Russia, they're also rolling their eyes at the way in which Putin is playing to the masses (and failing). They don't approve of his tantrums or immature grandstanding. They'd prefer a stable neighbour and partner applying the same approach. As it is, whilst China has risen to new economic heights, Russia as lost much of its industrial (particularly manufacturing) capability - their tractor plants were assembling knock-down kits from Czechia (until March 2022!) and we've all seen the sad demise of Roscosmos under Rogozin. All they really have now is resource-extraction. The cartel of Putin's mates have asset-stripped anything remotely complicated or sophisticated and are now bathing in money from mining and hydrocarbon operations.

      Meanwhile Western politics doesn't even have a day-to-day plan. A week has always been a long time in politics, but in the past decade its dissolved into outrage-of-the-hour - in part due to social media and twitter I suspect. The need for a continuous news stream and a reaction/opinion on everything is a huge distraction. It's why Private Eye continues to do so well - take your news once a fortnight and let the actual news and matters of importance rise above the noise and squabbling.

      In all seriousness, the UK Government doesn't actually have a formal industrial policy (not even one that says "we mostly let the markets manage themselves). It should be of no surprise that the tortoise beats the hare. Every time something like Newport comes up, it's after the fact because nobody in government is really paying attention - it takes a journalist asking "why are you selling this to the Chinese?" to get a review.

      The reality of course is that whilst we don't want to "pick winners" the way the National Enterprise Board used to, the Government really should be supporting UK industry (and not just the bits owned by Tory donors!). For instance by underwriting cheap loans for companies like Newport to get their compound silicon processes up and running, or for Sheffield Forgemasters (now owned by the MoD anyway!) to tool up and make specialist nuclear energy components.

      If there's war, it'll be because a western (probably US) leader decides it's necessary in light of their local politics - not because China has invaded somewhere. China doesn't need to go to war. They've got a billion people and oodles of resources (both domestically and through deals in Africa). The rest of us can take it or leave it.

      1. Anonymous Coward
        Anonymous Coward

        Re: waking up late

        agree with most, but I remind you, China has built up it's military machinery so much in the last 10 years it's boggling. Even creating islands to extend it's boarders and mount arms. I think Xi wants the world in his lifetime (not going to happen). If I was the guy watching if china launched anything - I wouldn't blink, ever. It's crazy what crazies will do to others out of greed.

        1. rg287

          Re: waking up late

          agree with most, but I remind you, China has built up it's military machinery so much in the last 10 years it's boggling. Even creating islands to extend it's boarders and mount arms.

          They have, but domestically. They have (on paper) an incredible brown/green-water navy which would make everyone including the US think twice about invasion.

          But... force projection? How do you get that massive land army to the US? Or marched through Russia to Europe? For all their capability, they'd struggle to take an isolated island like Hawaii (once exposed in the Pacific against the US blue-water fleet and the land-based air/missile forces on Hawaii/Japan/South Korea).

          Now, again, they could well be playing the long-game. Get their (slightly ropey) carriers working (one ex-Russian, one domestically built), learn how to operate them properly and then build 10 battle groups in quick order (they have the industrial capability).

          But certainly in the mid-term, they're cementing their regional position (with a billion people and a huge manufacturing/industrial base). They stand to gain nothing from going to "hot" war outside their borders, except a loss of foreign business and inward investment. Patience is a virtue, and they're happy to take our money for the foreseeable. Post 2040 of course (by which time they could have 5 or 6), all-bets are off.

  6. TimMaher Silver badge
    Coat

    Akin Gump

    Forrest surely?

    FTFY

  7. Boolian

    Salt, or sauce with your chips?

    As mentioned, there is only one modus operandi for any UK government "What can we flog next?"

    I don't really see the fuss about chip manufacture, everything else has been subbied out to other nation states. The UK does not have domestic resilence in any field - up to and including feeding its population with potato based chips.

    The UK is not unique in that respect I might add.

    The UK's domestic security doesn't hinge on Newport Fab and what country backdoors the CPU's your toaster uses.

    Our 'domestic security' is in everything and almost everything is owned by everyone else.

    If any 'acquisition' for anything, is walked back by a UKGov, then it's only because they've been told to keep their hands out the cookie jar and their lips are trembling about it.

    Turn your back and they'll be standing with an innocent look next to an empty jar, faces covered in chocolate and pointing at the dog.

    Newport has a long and sad history, because it was only ever another sweetie dispenser - but Daddy has now said "No! You saucy lot" and the only chips it will be making in future, is if McCains take it over.

    Don't worry Wales, perhaps the site will get a new lease of life as a service centre for Palantir - Choccy faces and sticky fingers all round!

    Woo-hoo!

    1. TheInstigator

      Re: Salt, or sauce with your chips?

      It's a cheap and easy way for the UK to show the US they are doing exactly what the US want.

      If I were the company Nexperia I'd just pull out of the deal and demand a refund.

      If Chinese companies did that to all investments they made abroad globally it'd certainly make countries sit up and take notice.

  8. Anonymous Coward
    Anonymous Coward

    Let's watch as the UK Gov denies China the asset then strangles it through lack of investment so China has a chance to build their own world beating capability, probably by hiring those laid off in Wales. Snatching defeat from the jaws of victory is a Whitehall specialty.

    1. Anonymous Coward
      Anonymous Coward

      Sad but true.

      However it is not really Whitehall is it?

      Businesses are run by businessmen and investors and banks, and generally Whitehall falls over itself to do what they ask.

      So whose fault is it?

      1. Roland6 Silver badge

        >So whose fault is it?

        Well suspect it is part of the English disease, which is most prominent in Tories and their allies...

        Unfortunately, they have created the English Trade Unions and the Labour party, who also the world through myopic eyes...

        And no I'm not suggesting the LibDems, Greens etc. have the necessary vision etc.

        Basically, the UK is f*cked for generation or so.

        1. TheInstigator

          More than 1 generation mate - it'll take centuries for the UK to recover

          1. Roland6 Silver badge

            Whilst I agree, I doubt the current (unsustainable) UK setup will survive the approaching “perfect storm”…

    2. NewModelArmy

      I don't think it is Whitehall that makes the mistake. I see many requests from the Government for consultancy in the relevant areas to the IET. Whitehall are getting the relevant information, but it is the politicians who fuck it up, on purpose or otherwise.

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