More than 100 jobs have been saved at a microchip-making factory after the government stepped in to buy the closure-threatened plant.

The Ministry of Defence (MoD) has paid £20m for the former Coherent facility at Newton Aycliffe, County Durham.

Coherent, which also makes microchips used by the military, had considered closure after losing a big contract with iPhone maker Apple.

Defence Secretary John Healey said: “We simply can’t afford as a country to let this company get into the wrong hands or to go under.”

During a visit of the site on Friday, he said the plant does something “no-one else in the UK does”.

Mr Healey defended the move to bail out the factory, which will be renamed Octric Semiconductors UK, even though the former owner could be seen as failing.

“This is exactly what an active government should do,” he said.

“It safeguards national security, it boosts British jobs, and I want to make sure that we grow the company and not just save it.”

The purchase by the MoD is the latest chapter in a chequered history for the giant manufacturing facility.

It was opened by the Japanese company Fujitsu in 1991, creating 600 jobs and promising many hundreds more.

However, the plant was closed in 1998 with the loss of the entire workforce.

The company had struggled to keep up with advances in microchip technology.

Since then it has been through multiple ownerships.