China is looking to get its hands on more semiconductor manufacturing technology through a cut-price deal that will see the Dutch chip maker Nexperia B.V. acquire U.K.-based Newport Wafer Fab.

Nexperia, which is owned by the Chinese private equity firm Wingtech Technology Co. Ltd., is already the second-largest shareholder in NWF, CNBC reported. Nexperia Chief Operations Officer Achim Kempe said that acquiring NWF, the largest chip producer in the U.K., would help it to make more chips and meet soaring demand for its products.

“The Newport facility has a very skilled operational team and has a crucial role to play to ensure continuity of operations,” Kempe told CNBC. “We look forward to building a future together.”

What really raised eyebrows about the deal is the price tag. Sources told CNBC that Nexperia will reportedly be getting its hands on Newport, Wales-based NFW for an incredibly cheap price of just £63 million ($87 million).

Forrester analyst Glenn O’Donnell told CNBC that the price tag is “minuscule” and that most wafer fabs typically cost well over $1 billion. “Even if this is older tech, this deal is ridiculously cheap,” he said.

In contrast, Texas Instruments Inc. last week announced it had agreed a $900 million deal to purchase Micron Technology Inc.’s Lehi, Utah-based chip manufacturing plant.

A big part of the £63 million fee will reportedly go toward servicing NWF’s debts. The company is said to owe HSBC Holdings plc around £20 million, and another £18 million to the Welsh government. The sources told CNBC these debts would be paid off once the sale goes through.

NWF Chief Executive Drew Nelson, who is also the company’s majority shareholder after buying it from German chip maker Infineon Technologies AG four years ago, is set to receive £15 million in cash from the deal.

NWF was founded in 1982 and manufactures silicon chips that are primarily used in power supply applications for the automotive industry. It’s also said to be developing more advanced “compound semiconductors” that provide more energy efficiency and compute power.

The auto sector is one of the industries that has been most severely affected by an ongoing global chip shortage, with numerous car makers reporting that factories were sitting idle earlier this year due to a lack of chips.

Beijing has lately been making moves to become more self-sufficient in semiconductor chip manufacturing. That’s in response to a number of leading Chinese tech firms, most notably Huawei Technologies Co. Ltd., being hit with U.S. sanctions that block them from buying chips made using American technology.

As such, government attitudes could still be an obstacle in Nexperia’s bid to purchase NWF.

“While we do not consider it appropriate to intervene at this time, we will continue to monitor the situation closely and will not hesitate to use our power under the Enterprise Act should the situation change,” a spokesperson for the U.K. government told CNBC.

Chinese companies have lately been hamstrung in their efforts to acquire chipmakers in other parts of the world. Just this month, South Korea said it was reviewing the proposed acquisition of MagnaChip Semiconductor Corp. by Beijing-based Wise Road Capital Ltd., noting that the target manufactures a “national core technology.”

The U.S. Department of Treasury has also requested that parties involved in that transaction file notice with the Committee on Foreign Investment.

Last March, the Italian government blocked Chinese investment firm Shenzhen Investment Holdings Co. Ltd., from purchasing a controlling stake in LPE S.p.A., a semiconductor firm based in Milan. It justified that move by saying the sector was of “strategic importance.”

Photo: Angel Bawa/Flickr