China’s Next Power Play, Nexperia

©Photo by Vlad

Nexperia, one of the largest semiconductor chip producers in Europe, was suddenly seized by the Dutch government. This intervention was justified on the grounds of an unacceptable amount of Chinese influence and strategic risk in the company. As a rebuttal, China has halted chip export to Europe. Causing shockwaves through industries which already have supply constraints. This leads to essential products being delayed or, in some cases, likely to disappear from the European markets. This begs the question: How did a Dutch company become a threat to national and even European security? 

Originally, Nexperia was a division of NXP, which was founded by Philips. It was fully bought out by the Chinese firm Wingtech in 2019, but its headquarters remained in Nijmegen. Unlike ASML or Nvidia, Nexperia focuses on manufacturing more standardised chips such as diodes and transistors, which are easier to make. A new electric vehicle needs at least 3,000 chips in this category, and Nexperia produces more than 110 billion of these parts a year. Therefore, they are interconnected with large parts of European markets. This, combined with Chinese ownership, placed Nexperia at the crossroads of industrial strategy and geopolitical tension. 

Their former CEO, Zhang Xuezheng, was first suspended and later removed from his position by the Enterprise Chamber. The Dutch authorities cited concerns that the board was under the influence of Wingtech and ultimately the Chinese Government. Internal investigations have revealed that impactful decisions were steered to diminish the autonomy of European supply chains. This was especially facilitated by their decision to grant the Chinese government access to their patents, and cutting down on production capacity within Europe.

Last month, the Dutch government stepped in with an emergency plan. There were growing concerns that, without any interception, the Netherlands and, by extension, the European Union could face a situation where the supply of critical chips would no longer be available. 

The Minister of Economic Affairs, Vincent Karremans, relied on the Goods Availability Act, which has never been applied since its issuance in 1952. The ministry said: ‘This is the law the cabinet uses only if there is no other option’. It allows ministers to issue binding orders, ensuring that essential goods stay within the Netherlands.

Certain control over Nexperia’s operations could now be held by the Dutch state. This guarantees that chip production would not be disrupted or redirected elsewhere. Most Dutch politicians are content with the decisions, calling what has happened ‘finally waking up from a geopolitical hibernation’.

On the other hand, it doesn’t mean this comes without consequences. China’s response was swift and stringent. Beijing announced temporary export bans on semiconductor materials and products to the entire European continent, framing the Dutch interventions as discrimination against Chinese companies. Although not all chips were targeted by this restriction, its impact was felt immediately by manufacturers throughout Europe. Most companies slowed down production, and others are adjusting their expectations due to all the delays. But for all the message was clear, interference with Chinese geopolitical interests will be met with their economic power. 

The European car industry, one of the largest global consumers of chips, is struggling to adapt. The last chip shortages in 2020-2022 due to the pandemic rattled the entire industry, causing many assembly lines to close and resulting in billions of Euros in losses. This new catastrophe makes them relive their worst nightmare. However, some trends are rising within this branch. Firstly, accelerating efforts to manufacture closer to home by building new factories and seeking partnerships in Japan, South Korea and the US. Secondly, no longer relying on a single country. Many automakers are adjusting procurement procedures that have remained unchanged for decades. Lastly, investing in more widely available components rather than tightly concentrated ones.

China has been using economic pressure to pursue strategic goals, which can also be seen from a broader perspective. However, to de-escalate this crisis and avoid others, Europe could adopt more transparent standards for foreign ownership in key sectors. That way, investors are all on the same playing ground. Diminishing the likelihood of dramatic last-minute interventions or even trade wars. Recently, they have signed the EU chip pact aimed at strengthening the continent’s semiconductor industry, doubling the global market share from 10% to 20% by 2030. This would improve supply and re

silience against foreign dependencies. 

This conflict has shown that the affair around Nexperia is more than just a corporate dispute. It’s a crucial pivoting point not only for the Dutch state but also for all other European countries. They must recognise how deeply embedded China’s control runs and how to regain their autonomy. Whether this new battleground is going to escalate or be resolved will shape the future of Europe’s technological independence.