The Netherlands’ government decided to take control of chipmaker Nexperia last month. According to a report by the news agency Reuters, this decision was prompted by concerns that the company’s former CEO was preparing to dismantle European operations and move production to China. The report cited four government sources in The Hague indicating that Zhang Xuezheng, the former CEO who also founded Nexperia’s Chinese parent company, Wingtech, had planned to lay off 40% of the European staff and close a research and development facility in Munich. Reuters sources also claimed that, before his suspension by a Dutch court on October 1, Zhang had already transferred secrets, including chip designs and machine settings, from Nexperia’s Manchester plant in Britain to a Wingtech-owned facility in China. Physical equipment from the Hamburg production plant was reportedly slated for relocation next.
How the Nexperia standoff between China and Netherlands affected carmakers
The standoff between China and the Netherlands over Nexperia has also led carmakers in Europe, the US, and Japan to warn of potential production problems due to possible chip shortages. Volkswagen has warned its employees about possible production delays caused by potential chip shortages. BMW and Mercedes-Benz said they are coordinating with suppliers to maintain production during the current standoff. In the US, General Motors CEO Mary Barra said during an earnings call that China’s chip export curbs “have the potential to impact production,” adding that GM has a team “working around the clock with our supply chain partners to minimize possible disruptions” in a “very fluid” situation.While Nexperia’s chips are considered basic, they are essential and used in large numbers in automotive electronic systems.
What the Dutch government said about taking control of Nexperia
The Dutch government took control of Nexperia on September 30, citing governance issues. A few days later, on October 4, China’s Ministry of Commerce restricted exports of the company’s products from the country. It’s important to note that, despite most of Nexperia’s chips being manufactured in Europe, about 70% are packaged in China before distribution.The company’s Chinese division has since begun operating independently and resumed sales to customers within China. The sources also told Reuters that the Dutch government is confident it can reach an agreement with China to reinstate Nexperia under a joint Dutch-Chinese structure.
