Nexperia drama is a lesson in the politics of semiconductors
It is now more than a month since the Dutch took control of the Chinese-owned semiconductor business Nexperia, invoking Cold War emergency powers to protect supply chains. So much for stereotypes of tulips and tolerance.
The Dutch government cited “serious governance shortcomings” in the Netherlands-headquartered business under the leadership of Zhang Xuezheng, chief executive and billionaire founder of Wingtech, its ultimate Chinese parent.
European executives turned on him for allegedly misusing company funds, something the Shanghai-listed electronics company strongly denies.
Xuezheng was ousted and the Dutch government has banned Nexperia from making any big decisions without its approval for a year.
The goal was to make sure Nexperia’s products remained available, to protect the Dutch and European economies. Instead, this extraordinary action has had the opposite effect, leading to a schism with Beijing and causing chaos in European carmaking, as China halted shipments of Nexperia products to the continent.
This is no Nvidia, making specialist AI processors, but Nexperia’s more basic chips are fundamental to many electronics, such as in cars for power-steering, in smartphones and smoke detectors.
The company employs 12,500 people and has turnover of about $2 billion.Originally a spin-off from Philips under the name NXP, it was taken over by Wingtech in 2019.
In a story which raises more questions than it answers, this all underlines how fiercely politicised semiconductors have become.
Domestic control of companies is considered as important as their location. Emphasis on “sovereignty”, the tech buzzword of 2025, is becoming stronger. Europe makes only about 10 per cent of the world’s semiconductors, it is vulnerable to shortages and it desperately needs its own supply.
This is also the latest example of supply chains being weaponised, as governments use control over chip technology as leverage in diplomacy and geopolitics.
Most of the flashpoints to date have been between the US andChina. This opens up a new front in the confrontation with Beijing.
National security concerns may not have been mentioned in the Dutch business court dealing with this case, but outside of it they are being widely discussed.
Wingtech was placed on a US official watch list in 2024, because it was said to be involved in helping the Chinese government’s efforts “to acquire entities with sensitive semiconductor manufacturing capability critical to the defence industrial bases of the United States and its allies”. In September this year the watchlist was widened to cover any company at least 50 per cent owned by one of the companies already on it: enter Nexperia and that Dutch decision.
In March 2022 the Commons foreign affairs select committee claimed that Wingtech was heavily backed by the Chinese Communist Party, citing Chinese investment screening specialists Datenna.
In fact, Times readers may remember Nexperia. Concerns were raised when it bought a chip factory in South Wales in 2021. A year later the government forced Nexperia to sell Newport Wafer Fab under national security legislation, citing its proximity to other semiconductor plants and its potential to develop sophisticated chips.
The word “China” was not mentioned in the short Final Order notice but it did not need to be.
As the stand-off with Nexperia continues in Europe, the British government faces a conundrum.
Nexperia may have sold Newport but it also has a plant in Stockport called Hazel Grove. There are now calls by China hawks here for a review of its ownership.
A chip chasm is growing between the West and China, and analysts are talking about the creation of a “dual semiconductor ecosystem”.
As the car companies are experiencing, Nexperia encapsulates just how complex global chip supply chains make companies vulnerable.
Under their chips acts, the EU and the US are spending billions to bring semiconductor production back to their shores. It is going to be a slow and painful process.
Katie Prescott is Technology Business Editor of The Times
No comments:
Post a Comment