The Dutch government has suspended its intervention at Nexperia, a Netherlands-based chipmaker owned by a Chinese entity, following diplomatic discussions with China.
The Hague initiated action in September citing “serious governance shortcomings” and concerns regarding the stability of the European semiconductor supply chain for automotive and other electronics sectors. Subsequently, Beijing restricted exports of the company’s chips.
On Wednesday, the Dutch government announced the suspension of its initial measures, citing “constructive talks” with Beijing.
China has welcomed the decision, characterizing it as “a first step in the right direction towards a proper resolution”.
Nexperia is a key supplier of fundamental computer chips to the automotive industry, and shortages have had impacts on global supply chains.
A deficit in the supply of computer chips utilized in various electronic goods and automobiles could significantly impede manufacturers’ ability to produce their products.
The Dutch government’s decision has the potential to de-escalate tensions between the European Union and China, which have been elevated in recent months due to trade-related matters and Beijing’s relationship with Russia.
Vincent Karremans, the Minister for Economic Affairs, stated that the suspension of action, taken under the Goods Availability Act, was deemed appropriate pending further discussions with the Chinese government.
“We are positive about the measures already taken by the Chinese authorities to ensure the supply of chips to Europe and the rest of the world,” he said in a statement.
The Dutch government stated that the Act was initially invoked due to concerns “from actions attributed to the now-suspended CEO, involving the improper transfer of product assets, funds, technology, and knowledge to a foreign entity”.
“These actions ran counter to the interests of the company, its shareholders, and Dutch and European strategic autonomy and security of supply,” it said.
In October, a Dutch court mandated the removal of former Nexperia CEO and Wingtech founder, Zhang Xuezheng, citing allegations of mismanagement.
The Dutch government has said its decision was aimed to prevent a situation in which vital chips would become unavailable in an emergency.
In December of the previous year, the US government designated Wingtech, Nexperia’s parent company, to its “entity list,” identifying the company as a national security concern.
Under these regulations, US companies are prohibited from exporting American-made products to entities on the list without explicit approval.
In the United Kingdom, Nexperia was compelled to divest its silicon chip facility in Newport amid national security concerns expressed by Members of Parliament and government officials. It currently operates a UK facility in Stockport.
Following the Dutch government’s reversal, Beijing acknowledged the move but cautioned that it remained “still a step away from addressing the root cause of the global semiconductor supply chain turmoil and chaos”.
“Furthermore, the erroneous ruling by the corporate court, spearheaded by the Dutch Ministry of Economic Affairs, to strip Wingtech of its control over Nexperia remains a key obstacle to resolving the issue,” it added.
Wingtech has indicated its intent to contest the decision.
Following the latest move, a spokesperson for Wingtch said the company “strongly” rejected the allegations against its chief executive.
“To date, no proof has been provided,” it added. “If the Dutch government is sincere about solving the problem, the Ministry should now file a letter with the Enterprise Chamber, explicitly withdrawing its support for the proceedings.
“These proceedings form a threat to the continuity of Nexperia B.V. and therefore for the economic security of the Netherlands and Europe – which is the exact same argument the Dutch government made previously in support of judicial intervention.”
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