China Opposes Dutch Government Control of Semiconductor Firm Nexperia

Beijing has expressed strong opposition to the Dutch government’s recent takeover of semiconductor manufacturer Nexperia, a firm owned by Chinese technology company Wingtech. On October 16, 2023, officials described the Dutch government’s actions as a violation of contractual agreements and market principles, marking a significant escalation in international tensions over technology and trade.

The Dutch government invoked a Cold War-era law at the end of September, asserting control over Nexperia due to national security concerns. This decision allows the government to intervene in the company’s operations, although production can continue. Nexperia, which is based in Nijmegen, Netherlands, is a crucial player in the semiconductor market, particularly for the automotive and consumer electronics sectors.

He Yongqian, a spokeswoman for China’s commerce ministry, stated that the Dutch move not only undermines contractual obligations but also threatens the business environment in the Netherlands and beyond. “We hope that the Netherlands will uphold its independence and self-reliance,” she remarked, urging a reversal of what she termed “erroneous practices.”

The situation has been further complicated by claims that the United States has influenced Dutch legal proceedings, particularly regarding the removal of Nexperia’s Chinese CEO, Zhang Xuezheng. Following the government’s intervention, a court ordered Zhang’s suspension, leading to the appointment of an interim CEO. This action has raised alarms over the potential repercussions for global supply chains, especially in Europe, where the automotive sector relies heavily on Nexperia’s products.

Nexperia’s chips, while not highly advanced, are produced in large quantities and are essential for various applications, including automotive components. The company operates its largest manufacturing site in Hamburg, Germany, with significant packaging and assembly operations in China. Since October 4, 2023, Beijing has restricted Nexperia from exporting certain goods, further complicating its operations.

The Dutch government’s takeover has drawn immediate reactions from major automobile manufacturers. BMW confirmed that parts of its supply chain are being affected by the ongoing disputes, stating, “We are in close contact with our suppliers and continuously assess the situation.” Meanwhile, Mercedes-Benz and Volkswagen have also acknowledged the situation, with Volkswagen reporting no immediate impact on its production.

As the geopolitical landscape shifts, the implications of this takeover extend beyond Nexperia itself. The Dutch government is concerned about the potential transfer of technology to Wingtech, a move it perceives as a threat to national security. The semiconductor industry, crucial for modern technology and automotive production, is now at the center of a complex international dispute involving multiple stakeholders.

With Nexperia seeking dialogue regarding export restrictions in both China and the United States, the future of the company remains uncertain. The unfolding events highlight the delicate balance between national security interests and global trade dynamics, raising important questions about the future of international business relationships in the technology sector.