The Dutch government’s unprecedented takeover of chipmaker Nexperia, driven by concerns over a former CEO’s alleged attempts to shift operations to China, has sparked a geopolitical standoff and raised alarm among global automakers about potential supply chain disruptions.
The Netherlands seized control of the chip manufacturer on September 30. Government sources cited fears that Nexperia’s former CEO, Zhang Xuezheng, was initiating a cessation of the company’s European business operations and attempting to move its manufacturing base to China. The government formally stated “management failure” as the reason for its intervention.
Mr. Zhang, who also founded Nexperia’s Chinese parent company Wingtech, reportedly planned to lay off up to 40% of European employees and close a research and development center in Munich.
On October 1, a Dutch court suspended Mr. Zhang from his CEO position. However, before this court order, Mr. Zhang had allegedly begun transferring trade secrets, including chip designs and machine settings, from Nexperia’s factory in Manchester, United Kingdom, to Wingtech facilities in China. His subsequent objective was reportedly to relocate machinery from the Nexperia factory in Hamburg, Germany, to China.
In response to the Dutch actions, China’s Ministry of Commerce issued an order on October 4, banning the export of Nexperia products from China.
This move complicates the global supply chain for Nexperia, as while most of its manufacturing capacity is in the Netherlands, 70% of its products are shipped to China for packaging before being sold to customers.
Nexperia’s business operations within China have reportedly begun the process of separating from the main company. These Chinese operations have also started selling products directly to Chinese customers.
The dispute, which has unfolded over several months, has prompted warnings from car manufacturers in Europe, the United States, and Japan. They are concerned about potential production problems stemming from an expected shortage of chips.
Although Nexperia produces basic chips, these components are extensively utilized in the electronic systems of a vast number of automobiles worldwide.
Dutch government sources have indicated their belief that a negotiated solution can be reached with China. They hope to restore Nexperia to a unified, two-country operational structure.