China Aims to Bring Dutch Chip Tech Home
When Chinese technology firm Wingtech acquired Dutch chipmaker Nexperia in 2019, the transaction appeared to be standard. However, five years later, that acquisition has transformed into a geopolitical confrontation, prompting Dutch state intervention, factory disruptions, and diplomatic tensions that extend from Washington to Beijing. The Netherlands’ intervention in semiconductor maker Nexperia has intensified into a technology and diplomatic conflict following years of alerts that ownership linked to Beijing could present security threats, as per reports. Frans Scheper, the former chief executive of Nexperia, now asserts that the risks were apparent from the outset, providing a unique perspective on the clash between China’s aspirations to obtain semiconductor technology and the interests of Western governments. He detailed how Dutch officials received warnings early on, yet took action only years later. In September this year, Dutch authorities took control of Nexperia, a chipmaker owned by the Chinese firm Wingtech, invoking an emergency economic-security law due to concerns that crucial research and intellectual property might be transferred to China. A court subsequently dismissed Wingtech’s controlling shareholder, Zhang Xuezheng, from his position as chief executive.
Reports says that the actions followed years during which officials received early warnings yet failed to take action. Scheper that he had alerted the government in 2019 about Zhang’s intention to transfer knowledge and technology to China soon after acquiring the company. Nexperia manufactures fundamental chips utilized in automobiles and household appliances, employing thousands across Europe, the United States, and Asia. The report indicates that Dutch officials had knowledge as early as 2020 of Zhang’s prior conviction in China for stealing trade secrets; however, formal barriers to foreign tech takeovers were not established until 2023. This year marked a significant turning point, as the US indicated export controls aimed at majority-owned subsidiaries of companies on its “entity list”. Wingtech has been implicated for purportedly assisting China in obtaining restricted chip-making technology. Dutch authorities expressed concerns that Nexperia might also be impacted, potentially disrupting European supply chains. Court documents referenced in the report indicated that the Netherlands aimed to shield Nexperia from these limitations by reorganizing its ownership to enhance autonomy.
Zhang initially cooperated; however, he later resisted, which led to an escalation of the situation. Following the Dutch seizure, China temporarily halted exports of Nexperia chips produced in its factories, compelling European car manufacturers to either slow down or suspend their production lines. Nexperia’s Dutch and Chinese entities are currently engaged in accusations of misconduct against one another. Dutch officials allege that the Chinese unit misused the company seal and created unauthorized bank accounts, while the Chinese arm stated on social media that the Dutch side “disregards the facts” and attempted to cut China out of the supply chain, according to the reports. The Dutch ministry of economic affairs reported that it became aware in September of “advanced plans” to close or sharply scale back European sites. According to a ministry summary referenced in the report, China’s commerce minister has informed European officials that the Netherlands ought to refrain from meddling in business decisions. Beijing has asserted that The Hague bears responsibility for the disruption in chip supply. Experts indicate that the Dutch chip industry seeks entry into China’s market yet finds itself caught between increasing US restrictions and Beijing’s drive for technological supremacy.
Zhang was detained for over a year two decades ago for stealing software code from his previous employer ZTE, resulting in more than 1.1 billion renminbi in losses and leading ZTE to close a product line. Last year, China’s securities regulator imposed a fine of 18 million renminbi on him and associated firms for their failure to disclose share purchases. Despite these risks, the report highlighted that Zhang pursued the Nexperia acquisition, which significantly increased Wingtech’s debt. Chinese experts likened the deal to “a snake swallowing an elephant,” given that the Dutch company was larger than its buyer. Washington, Beijing, and The Hague have initiated measures to alleviate tensions, which include the lifting of the seizure order. Nonetheless, the Dutch court’s decision to remove Zhang from his position as chief executive stands firm, and Wingtech has announced its intention to appeal, thus leaving the company’s future and Europe’s involvement in the semiconductor power struggle in a state of uncertainty.
