How a Dutch chipmaker got caught up in the US-China tech war

The Dutch government has intervened to take control of Nexperia, a chip manufacturer owned by a Chinese firm, highlighting the growing entanglement of nations in the escalating tech rivalry between the US and China. Based in Nijmegen, Nexperia specializes in producing lower-end chips used in consumer electronics, automotive, and industrial sectors, with additional manufacturing facilities in Germany and the UK. In a recent announcement, the Dutch government revealed its decision to assert control over the company. This move followed the suspension of Nexperia's CEO and shareholder, Zhang Xuezheng, as mandated by a court order. American officials had indicated that Zhang's continued leadership would pose a barrier to the company's potential exemption from the US entity list, which categorizes companies as threats to national security. The entity list, established by the US Commerce Department, has seen significant expansions, particularly with new rules introduced in late September that impact subsidiaries owned by flagged companies. As Nexperia is entirely owned by Wingtech—a partially state-owned Chinese entity already on the list—this decision directly affects its operations. Amidst this backdrop, tensions between the US and China have intensified. Beijing has accused the US of reigniting trade conflicts, particularly after Washington's recent restrictions on exporting critical technologies. In retaliation, China has tightened its own export regulations on rare earth materials, further complicating the tech landscape. Court documents revealed that discussions between Dutch officials and the US Bureau of International Security highlighted concerns regarding Nexperia's governance and ownership. The minutes of these meetings indicated that retaining Zhang in his position would hinder the company’s chance of exemption from US scrutiny. In response to inquiries, Nexperia emphasized that the Dutch government's actions were not an affront to China or its citizens but rather a necessary step to ensure the stability of chip supply in Europe. The company’s leadership expressed hope for a resolution amid the looming US export controls. The Dutch economic ministry cited “serious governance shortcomings” as justification for the takeover, which aims to prevent potential shortages of essential goods in crises. This intervention will restrict Nexperia from making significant operational decisions without government approval for a year. Meanwhile, China has retaliated by enforcing stricter export controls against Nexperia, further complicating the situation. Wingtech, Nexperia's parent company, has denounced the Dutch government's actions as politically motivated interference, asserting that it is pursuing all legal and diplomatic avenues to contest the takeover. The situation continues to unfold, with both sides firmly entrenched in their positions, reflecting the broader geopolitical tensions impacting the global tech industry.