UK buys chip factory for $27 million to secure military supply

The British government has bought a factory threatened with closure, to secure domestic manufacture of semiconductors used in military platforms such as fighter jets.

The plant in Newton Aycliffe in northern England, which the government has bought from the US firm Coherent for an estimated GBP 20 million (USD 27 million), is the only secure domestic manufacturer of gallium arsenide semiconductors. 

The purchase by the Ministry of Defence (MoD) is expected to save 100 skilled jobs.

“This government recognizes the strategic importance of semiconductors as a critical technology for the future of the UK and a significant enabler of the government’s growth and clean energy missions,” the Ministry of Defence writes in a press release.

The Newton Aycliffe factory had been struggling over the last 12 months after losing commercial contracts. The government said it would invest in the firm, to be renamed Octric Semiconductors UK.  

Coherent had considered closing the site after reportedly losing a big contract with Apple.

“We simply can’t afford as a country to let this company get into the wrong hands or to go under,” UK Defence Secretary John Healey said. “This is exactly what an active government should do. It safeguards national security, it boosts British jobs, and I want to make sure that we grow the company and not just save it.”

Japanese company Fujitsu opened the facility in 1991 but closed it in 1998. Since then it has seen multiple owners.  

“Semiconductors are at the forefront of the technology we rely upon today, and will be crucial in securing our military’s capabilities for tomorrow. This acquisition is a clear signal that our government will back British defence production. We’ll protect and grow our UK defence supply chain, supporting North East jobs, safeguarding crucial tech for our Armed Forces and boosting our national security,” Healey said.