As a concession, the Dutch government has agreed to suspend its forced acquisition of Chinese-owned Nexperia, a semiconductor manufacturer headquartered in the Netherlands. This decision follows a series of very constructive discussions with Chinese officials. These roundtables really helped to shape our understanding of company priorities, and how their corporate actions could ultimately threaten national security.
Nexperia, a wholly owned subsidiary of a Chinese company called Wingtech, has become an essential supplier of commodity computer chips—especially for the automotive industry. Its products are equally indispensable to a wide array of electronic consumer products. Controversy over the proposed governance model and ownership structure triggered intense scrutiny by Dutch and UK officials. Last month, the Dutch government moved to change that. They highlighted “grave governance deficiencies” at Nexperia and reinforced the importance of maintaining a resilient supply chain for semiconductors that serve national strategic sectors.
Because the national security establishment became increasingly alarmed. This was particularly true after Wingtech, Nexperia’s parent company, was placed on the U.S. entity list in December. This designation made Wingtech a government blacklisted possible national security threat, leading the U.S., U.K., and Canadian governments to investigate further. In a nod to these issues, Nexperia was forced to sell off its silicon chip factory in Newport, UK.
The UK’s decision to intervene was largely influenced by apprehensions expressed by Members of Parliament and ministers regarding the implications of Nexperia’s ownership on national security. Additionally, the Dutch government’s action stemmed from fears that a disruption in semiconductor supply could occur during emergencies, potentially impacting the automotive sector and other electronic goods.
Amazingly, a Dutch court has vindicated this public interest by ordering the removal of Nexperia’s CEO, Zhang Xuezheng. As founder of Wingtech, he too is accused of something akin to mismanagement. Wingtech has “strongly” denied these allegations, alleging that their leadership is dedicated to preserving operational independence and transparency.
That’s why the Dutch government recently acted under the Goods Availability Act. This new law gives them the authority to take action to ensure the availability of these critical goods. After talks with Beijing, the Dutch authorities decided to call off the intervention. The Chinese government welcomed this move, describing it as a “first step in the right direction towards a proper resolution.”
The suspension indicates a potential thawing of relations and suggests that both countries are seeking pathways to resolve their differences without further escalation. This unfortunate development underscores the increasingly fraught nexus of international trade and national security. It’s a reminder, too, of the urgent demand for semiconductor chips in our ever-more connected economy.