Squeezed by Superpowers, Dutch Chipmaker Nexperia Seeks a Lifeline

Imagine you’re a CFO and, suddenly, you’re promoted to CEO. A dream come true for C-suiters who have measured the drapes on the office down the hall with just that in mind. 

But in a capitalistic version of “The Monkey’s Paw,” you get the top job at the precise moment your company is caught in the vise grip of the US-China trade war, with just weeks to satisfy American officials or be cut off from goods produced in the world’s largest economy. This is the task before Stefan Tilger, the newly appointed interim CEO of the Netherlands-based semiconductor firm Nexperia.

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You’ve likely heard of Nexperia by now. The chip manufacturer, headquartered in the Dutch city of Nijmegen, was acquired in 2019 by state-backed Chinese semiconductor firm Wingtech. Nexperia makes specialized, though relatively basic, chips for consumer electronics, industrial use and, most crucially, the auto industry. Last year, the US government put Wingtech on its “entity list,” the Commerce Department tally of foreign businesses viewed as national security concerns. To keep those worries from impacting Nexperia as well, plans were put in place to fence off the subsidiary’s European operations from its parent.

But court records released in Amsterdam last week show the US told the Netherlands in June that things were moving too slowly. Then, last month, the Commerce Department said it would extend the entity list designation to Nexperia, which would bar US firms from exporting American-made goods to the company. The Dutch government sprang into action, invoking a never-before-used Cold War-era law to seize control of Nexperia on September 30. Then came the squeeze: China’s Ministry of Commerce retaliated days later by banning the export of finished Nexperia products. Because most of the chips that its European operation manufactures are shipped to China to be finished and assembled as part of larger goods, this could prove disastrous for Nexperia, and the company found itself stuck in the middle of a US-China trade standoff. All the while, lobbying groups representing virtually all major US and European automakers warned of production slowdowns or stoppages as soon as next month if the situation isn’t resolved:

• On Friday, the Dutch Ministry of Economic Affairs said it was “in discussions about resolving this matter with the Chinese authorities,” while Nexperia said it’s negotiating with the US and China for relief. The Dutch government said its seizure of Nexperia was not related to the US, but rather its own concerns that the company could transfer technology to its Chinese parent.
• As well as national security and technology concerns, Nexperia will likely need to address alleged mismanagement to earn the confidence of Dutch and US officials: The Amsterdam court found Nexperia’s now-suspended CEO Zhang Xuezheng made excessive orders totalling $200 million from a supplier called WSS, which is another Wingtech subsidiary, in order to keep it afloat.

Change the Channel: One need only look across the North Sea to see Nexperia isn’t new to controversy. After the company bought an 86% stake in the UK’s largest chip plant in 2021, officials forced it to sell, citing concerns China could undermine Britain’s ability to manufacture semiconductors.