Nexperia Seizure Shakes Chip War

Dutch State Seizes Control of Chinese-Owned Chip Giant Nexperia

In a move signalling a dramatic escalation in the global technology standoff, the state in the Netherlands has assumed authority over Nexperia, a semiconductor producer located there but owned by the Chinese company Wingtech. Citing grave concerns over national and continental financial stability, The Hague invoked a dormant Cold War-era law to intervene in the company's operations, a decision that has sent shockwaves through the international business community and intensified geopolitical friction between Europe and China. The intervention's goal is to secure the continent's provision of essential chips for automobiles and electronics while preventing the transfer of sensitive technology.

An Unprecedented Intervention

The Economic Affairs Ministry in the Netherlands explained its "highly unusual" action by highlighting "sharp indicators of major leadership failures" at Nexperia. While officials remained tight-lipped on specifics, a 1952 law known as the Goods Availability Act, created to secure vital resources during a national emergency, enabled the move. This marks the first time the act has ever been used, underscoring the gravity with which the government views the situation. The move effectively grants the Dutch state the power to veto or reverse any corporate decisions deemed harmful to Nexperia’s future in Europe or the continent's strategic interests.

Safeguarding Europe's Supply Chain

At the heart of the Dutch government's action lies a profound anxiety about the security of Europe's semiconductor supply chain. Nexperia is a major producer of basic but essential chips, such as transistors and diodes, that are fundamental components in a vast array of products, from automobiles to consumer electronics. A disruption in their supply could cripple key European industries. Authorities were concerned that with its Chinese ownership, Nexperia might be forced by officials in Beijing to stop deliveries or give preference to Chinese clients in a crisis, which would leave European producers exposed. The intervention is therefore a preventative measure to ensure these vital components remain available.

Protecting Intellectual Property

Besides securing the physical chip supply, the government in the Netherlands moved to shield vital technical expertise. Concerns were mounting that sensitive intellectual property from Nexperia's European and Dutch locations could be moved to its holding corporation, Wingtech, in China. Such a transfer would not only erode Europe's competitive edge but also potentially contribute to China's technological and military advancement. The government's intervention serves to create a firewall, preventing the loss of strategic assets and preserving Europe's technological independence in a highly competitive global arena.

A Cold War Law Revived

The legal instrument used for this state intervention, the Goods Availability Act, dates back to the early days of the Cold War. Enacted in 1952, it was intended to give the government sweeping powers to manage national resources in the event of war or a similar existential threat. Its revival in the 21st century to address a corporate governance issue highlights the shifting nature of national security, where economic and technological rivalries have become as significant as military confrontations. This historic use of the law sets a powerful precedent for how European nations might protect their strategic industries from foreign influence.

Leadership Overhaul Mandated

A court in Amsterdam mandated the immediate suspension of Zhang Xuezheng, Nexperia's chairperson, who also holds the equivalent position at Wingtech, as part of the state's action. A government-appointed overseer, Dutch businessman Guido Dierick, has been installed with a deciding vote on the company's board. This move effectively wrests managerial control from the Chinese parent company. The court's preliminary ruling found "well-founded reasons to doubt the correct policy and correct conduct of affairs" were being pursued, giving legal backing to the government's decisive action to reshape the company's leadership and strategic direction.

Wingtech's Defiant Response

Wingtech, Nexperia’s parent company, reacted with immediate condemnation of the Dutch government's move. In a sharply worded statement, the company decried the intervention as a "politically motivated" action driven by "geopolitical bias" rather than a factual assessment of risk. Wingtech has promised to defend its lawful interests and is consulting with global law firms to examine every possible judicial solution. The firm also stated it would seek the support of the Chinese government, framing the dispute as a matter of discriminatory treatment against a Chinese-funded enterprise.

Beijing Voices Strong Opposition

The government in China mirrored Wingtech's indignation. Expressing deep concern, the Semiconductor Industry Association of China called the Dutch actions "partial and prejudicial." Beijing views the action as a contravention of free-market principles and a move that undermines open trade. This intervention is seen not as an isolated corporate dispute but as part of a broader, Western-led effort to contain China's technological rise. The strong rhetoric from Beijing suggests that diplomatic and economic repercussions may follow, further aggravating the already strained connection between China and the EU bloc.

The American Influence

The Dutch decision did not occur in a vacuum. This follows ongoing pressure from the United States, which has for a long time flagged Wingtech as a risk to its national safety. Washington added Wingtech to its "entity list" during December 2024, a move that severely limits the company's access to American technology. This listing was later expanded to include Wingtech's subsidiaries, directly implicating Nexperia. Court documents revealed that US officials had explicitly told their Dutch counterparts that Nexperia's Chinese chief executive was "problematic" and that his replacement was a prerequisite for any potential easing of restrictions, indicating a clear transatlantic coordination in policy towards China.

Ripple Effects in the UK

The controversy surrounding Nexperia is not confined to the Netherlands. Previously, the corporation had to divest its semiconductor factory in Newport, Wales, after facing strong pressure from the UK administration. Similar worries about national safety had been voiced by British ministers and MPs regarding the Chinese proprietorship of a vital UK technology asset. Nexperia's subsequent sale of the Newport Wafer Fab to an American company, Vishay Intertechnology, for $177 million underscores a consistent Western approach to de-risking supply chains and limiting Chinese access to strategic technology assets.

Image Credit - Ikknmnmnm, CC BY-SA 4.0, via Wikimedia Commons

A Global Chip War Intensifies

The Nexperia takeover is a pivotal moment in the escalating global "chip war." Semiconductors are the bedrock of the modern digital economy, and their production has become a key arena for geopolitical competition between the United States and China. Washington has implemented sweeping export controls to slow Beijing's progress in advanced chip manufacturing, while China has retaliated with its own restrictions on critical raw materials like rare earth elements. The Dutch action demonstrates that Europe, traditionally caught between the two superpowers, is now taking a more assertive stance to defend its own interests.

Europe's Quest for Sovereignty

This intervention aligns with the European Union's broader strategy to achieve "technological sovereignty." Recognizing its heavy dependence on foreign chip suppliers, particularly from Asia, the EU has launched the European Chips Act. This ambitious initiative aims to mobilise over €43 billion in public and private investment to double the bloc's share of the global semiconductor market to 20% by 2030. The act seeks to bolster domestic research, design, and manufacturing capabilities, ensuring Europe can withstand future supply chain shocks and compete on a more equal footing with other global powers.

The Fragile Global Supply Chain

The COVID-19 pandemic starkly exposed the fragility of the global semiconductor supply chain. Factory shutdowns and logistical bottlenecks led to severe shortages that crippled industries worldwide, most notably the automotive sector. This crisis served as a wake-up call, highlighting the risks of concentrating production in a few geographic locations, particularly Taiwan, which produces over 90% of the world's most advanced chips. The Nexperia case illustrates a growing trend among governments to prioritise resilience and security over the pure efficiency of globalised supply chains, even at the cost of free-market principles.

Economic Security Trumps Free Markets

The decision from The Hague to put national financial stability before the ideals of free-market investment might establish a major precedent. For decades, Western governments largely welcomed foreign investment with minimal interference. However, the rise of strategic competition with China has prompted a fundamental rethink. The Nexperia intervention signals that foreign ownership of companies in critical sectors will face much greater scrutiny. Other governments in Europe might now feel encouraged to adopt comparable protective actions, which could result in a more disjointed and political global investment environment.

A Precedent for Future Action

Analysts suggest that the bold move from the Dutch government could clear a path for different administrations to adopt more interventionist industrial policies. As technology becomes increasingly central to national power, governments are less willing to leave the fate of strategic assets to the whims of the market or the decisions of foreign-owned corporations. The Nexperia case may be remembered as the moment Europe fully entered the geopolitical tech race, using state power to safeguard its industrial base and secure its technological future in an increasingly uncertain world.

The Market's Reaction

The financial markets reacted swiftly to the news of the Dutch state's intervention. On the Monday after the news broke, the stock price of Wingtech, Nexperia's holding corporation, which trades on the Shanghai exchange, fell by ten percent, reaching its daily downward limit. This sharp decline reflects investor uncertainty about the future of Nexperia and the potential for further geopolitical disruptions to Wingtech's global operations. The market's nervous response highlights the significant financial risks now associated with investments in technologically sensitive sectors that are at the centre of international power struggles.

Nexperia's Operations Continue

Despite the drastic shift in leadership, officials in the Netherlands have made it plain that Nexperia's daily manufacturing will proceed without interruption. The intervention is not aimed at shutting down the company but at steering its strategic decisions in a direction that aligns with Dutch and European interests. The government's stated goal is to mitigate risk while ensuring the continuity of a vital part of the continent's industrial ecosystem. Nexperia released a concise statement affirming its adherence to every current rule and law, and it declined to provide additional remarks regarding the government's intervention.

A Future of Uncertainty

The long-term consequences of the Dutch government's intervention remain uncertain. Wingtech's impending legal challenges could lead to a protracted court battle, while China's response could take the form of further trade restrictions or diplomatic pressure. The case will serve as a crucial test of Europe's resolve to enforce its economic security agenda, potentially at the cost of its trade relationship with China. How this situation unfolds will have profound implications for international business, supply chain management, and the future of the global technology order.

The Strategic Importance of Basic Chips

While much of the focus in the semiconductor rivalry is on cutting-edge processors for artificial intelligence, the Nexperia case highlights the strategic importance of so-called "legacy" or "mature node" chips. These less advanced components are the workhorses of the electronics industry, used in immense volumes in everything from washing machines to power grids and electric vehicles. A secure supply of these foundational chips is just as critical to a modern economy as access to the most advanced technology, a fact the Dutch government's action has brought into sharp focus.

Geopolitical Fault Lines Deepen

The seizure of control at Nexperia is more than a corporate dispute; it is a manifestation of deepening geopolitical fault lines. The world is increasingly dividing into competing technological blocs, with nations forced to navigate complex questions of allegiance and dependency. For multinational corporations, this means operating in an environment of heightened risk and regulatory uncertainty, where business decisions can be abruptly overturned by national security imperatives. The Nexperia saga is a clear warning that the era of unfettered globalisation in the technology sector is over.

A New Chapter in EU-China Relations

This bold intervention by a key EU member state marks a new and more confrontational chapter in the bloc's relations with China. The EU has increasingly defined China as not just a partner but also an economic competitor and a systemic rival. The Nexperia case translates this strategic reassessment into concrete action. It demonstrates a newfound willingness in Europe to use powerful legal and political tools to counter perceived threats from Beijing, signalling a tougher and more defensive posture that is likely to shape EU-China interactions for years to come.