The Hague’s intervention with the China-based company signals that Western governments may become more protective of supply chains, intellectual property and national security
In sum – what to know:
Protective stance – The Dutch government invoked the Goods Availability Act to take over Chinese-owned Nexperia, a highly exceptional move galvanized by Amsterdam’s concerns about national and economic security.
Change in mindset – The move is the first of its kind for The Netherlands, signifying a possible shift in Europe’s mindset, from open blocs toward more protective stances related to strategic assets.
Escalation of geopolitical tensions – Chinese entities were outraged, calling the move “extraordinarily disgraceful,” “discriminatory, and a “violation of international trade rules.”
Trade tensions between the West and China escalated Monday when the Dutch government took control of Chinese-owned Nexperia, triggering a retaliatory ban by China on exports from Nexperia’s Nijmegen facilities.
In one of the most severe interventions by a European country to date, the Dutch Ministry of Economic Affairs invoked the Goods Availability Act (Wet beschikbaarheid goederen) to seize control of Nexperia’s headquarters and R&D site. A subsidiary of Shanghai-listed Wingtech Technology, Nexperia ships more than 110 billion semiconductor products annually, many of which are essential components for the power management and data transfer in AI systems and high-performance AI chips (like wide gap chips used for renewable energy grids, AI, and other high-voltage, high-temperature use cases).
Under the pretext of national security, Nexperia founder and CEO Zhang Xuezheng was removed from his post and control over voting rights on Nexperia shares was transferred to an independent administrator. Currently CFO Stefan Tilger is acting as interim CEO, and COO Achim Kempe and CLO Ruben Lichtenberg are leading in the interim with non-executive director Guido Dierick. After the announcement, Shanghai-listed shares of Wingtech slid to the maximum-permitted 10%.
The ouster of Xuezheng and seizure of decision-making power thrust the Dutch government into a geopolitical battle that has thus far focused in large part on the U.S. and China. The China Chamber of Commerce to the EU (CCCEU) condemned the move as a “modern act of economic banditry” and a “breach of market economy principles,” while the China Semiconductor Industry Association deemed the takeover “an abuse of the concept of national security.” Nexperia’s parent company, Wingtech, subsequently released a statement calling the action “an excessive intervention based on geopolitical bias rather than a fact-based risk assessment.”
Dutch Minister of Economic Affairs Vincent Karremans justified the decision, citing “the significant scale and urgency of the governance deficiencies at Nexperia” and concerns about “the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities.” His statement focused on preventing a situation in which “the goods produced by Nexperia (finished and semi-finished products) would become unavailable in an emergency.”
Currently, the company’s regular production processes continue, but the Dutch government has prohibited Nexperia from relocating company parts or removing existing executives. Talks are underway to resolve governance and business continuity issues.
Yesterday, the Guardian reported that the U.S. in June warned the Netherlands that Nexperia might not be able to export to the U.S. if CEO Zhang Xuezheng remained at the helm, as some believed he might transfer assets and intellectual property to Chinese entities. Despite that reporting, the Dutch government denied that U.S. pressure influenced its decision to take control of Nexperia. The Dutch Secretary of State Aukje de Vries told reporters yesterday, “We take our own decision on this.”
As the U.S. and its allies scrutinize the security and economic implications of supply-chain dependance on Chinese computer chip and semiconductor manufacturers, it may become more commonplace for governments to review some of the strategic takeovers of western companies by Chinese investors years ago. For example, Wingtech had in 2018 bought Nexperia from Dutch engineering giant Philips, then in 2021, Wingtech acquired a majority share in the U.K.’s Newport Wafer Fab. A year later, the British government forced a divestiture of Wingtech’s 86% share in Newport, it’s largest semiconductor manufacturer, later approving its sale to U.S.-based Vishay Intertechnology.
If there’s momentum for redirecting investments toward allies in efforts to build more resilient supply chains and to protect national security interests, it will be important to strike a balance between targeted decisions in areas where national security and supply-chain resilience are a real concern, and areas in which the sale of non-sensitive, commercial products to China and other nations do not pose a threat. Trade will remain critical to maintaining U.S. leadership in advanced semiconductors and other highly specialized technologies.