THE fate of a semiconductor factory in Newport which employs hundreds of people still hangs in the balance pending any legal action over its sale, according to a new report.

The UK Government has ordered owners Nexperia to sell "at least 86 per cent" of its stake in Newport Wafer Fab "to prevent, remedy or mitigate... national security risks".

A parliamentary committee of MPs has now called on the government to "work proactively" to sell the Newport site to a new owner and secure its future, following months of legal wrangling over Nexperia's purchase of the plant and the firm's alleged links to the Chinese state.

In November, UK business secretary Grant Shapps cited those reported links when he blocked Nexperia from completing the purchase of Newport Wafer Fab, which employs nearly 600 people.

The new report from parliament's business committee notes Mr Shapps "considers that a risk to national security from this acquisition relates to the technology and know-how that could result from a potential reintroduction of compound semiconductor activities at the Newport site, and the potential for those activities to undermine UK capabilities".

In recent years, the city and region have emerged as leaders in semiconductor manufacturing, known as the South Wales Cluster.

But that local industry could be excluded from future UK projects if ties to Nexperia are not severed, the committee said.

"The location of the [Newport Wafer Fab] site could facilitate access to technological expertise and know-how in the South Wales Cluster, and the links between the site and the Cluster may prevent the Cluster being engaged in future projects relevant to national security," the members of the business committee warn.

Nexperia has since "publicly indicated that it may launch judicial review proceedings against the [UK] Government" over Mr Shapps' decision, the committee noted.

Semiconductors are key parts of microchips used in everyday electronics and also in specialist fields such as military technology.

The committee said the components play "a hidden but highly significant role in many parts of the UK's national infrastructure".

It has now called on the UK Government to produce a semiconductor strategy "to ensure security of supply chains for chips".

Committee chairman Darren Jones, a Labour MP, said: "Countries across the globe have grasped the importance of securing semiconductor supply chains for their futures, why haven’t we? While others race ahead, ploughing billions into setting up fabs or industry support, we’re not even at the starting line."

On the need for action, he added: "Two-years in the making but still no strategy. Further delay would be an act of national self-harm. With 40 days until the budget, the strategy must be published urgently so that sufficient funds can be put behind it and used effectively."