The Dutch government has intervened to reassert control over how Nexperia is operating. This Chinese-owned semiconductor manufacturer operating in the Netherlands has alarm bells ringing over potential risks to national and European economic security. This decision is set against the backdrop of increasingly fraught debates over foreign ownership of key technology companies and their impacts on national security.
As the only company in the world producing Nexperia’s full-range semiconductors, their factory powers applications from autos to consumer electronics. This subsidiary is ultimately owned by Wingtech, a Chinese parent company. The Dutch government acted under its Goods Availability Act, citing “acute signals of serious governance shortcomings” within Nexperia as justification for the intervention. According to the Dutch government, the current state of affairs threatens fundamental technological knowledge and skills in the Netherlands and Europe. They fear this might endanger the existence of these crucial resources long term.
The announcement comes on the heels of a growing list of international regulatory actions taken against Wingtech. In September, the United States Department of Commerce took a more aggressive step by adding a Shanghai-listed firm to the Entity List. Consequently, Nexperia divested its silicon chip factory located in Newport, Wales. This transaction was born out of national security worries. The importance of national security underscores the increasing scrutiny of foreign investments in key technology sectors.
Actions the Dutch government took, or failed to take, that unduly affected Wingtech. In turn, the company’s stock price tanked, with shares down as much as 10% by Monday morning. The sole remaining avenue available to the company is to take action to protect its rights. It will demand interventions by government in connection with the deteriorating situation at Nexperia.
This is all particularly true for its Stockport facility, as concerns mount over the prospect of its chips becoming unavailable in times of crisis. The Dutch government’s intervention seeks to address this risk by committing that Nexperia will comply with stronger governance standards.
The Dutch Ministry of Economic Affairs stated that this step was needed to protect critical technology competencies in Europe. Governments across the globe are taking a harder line on tech companies with foreign ownership. This places Nexperia at ground zero of an increasingly growing global discussion about economic sovereignty and security.
“acute signals of serious governance shortcomings” – Dutch government
“threat to the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities” – Dutch government