Late last month, the escalating competition between Washington and Beijing for dominance over tech supply chains took a significant turn in the Netherlands. Under increasing pressure from U.S. officials, the Dutch government intervened in the operations of Nexperia, a Chinese-owned chip manufacturer headquartered in the Netherlands. Nexperia, owned by the Chinese company Wingtech, operates a complex global supply chain typical of the semiconductor industry.
Nexperia specializes in designing older types of chips that are essential for various applications, including automobiles and electronics. The company employs thousands of workers across Europe, the United States, and Asia, with factories in the United Kingdom and Germany producing silicon wafers, and assembly and testing facilities located in China, the Philippines, and Malaysia.
On September 30, the Dutch government announced that decisions regarding Nexperia would now fall under the jurisdiction of its Minister of Economic Affairs, Vincent Karremans. This action followed the expansion of a U.S. trade blacklist that directly impacted Nexperia due to its ownership by Wingtech, which was already on the list. The Dutch government stated that its decision aimed to ensure that Nexperia's products remain available during emergencies.
Documents released in an Amsterdam court revealed that U.S. officials had been pressuring their Dutch counterparts regarding Nexperia's Chinese ownership for several months. The U.S. Department of Commerce imposed trade restrictions on Wingtech last December, and in June, American officials warned the Dutch Ministry of Foreign Affairs that Nexperia could face similar restrictions unless it replaced its Chinese CEO, Zhang Xuezheng. The situation highlights the complexities of international relations and the ongoing battle for control over the global chip industry.
Nexperia's situation reflects a broader struggle for control over the global semiconductor market, where both Washington and Beijing have asserted significant authority over supply chains for semiconductors and critical minerals. These components are essential for a wide range of products, from cars to advanced artificial intelligence systems. As these two superpowers vie for influence, other nations are also re-evaluating Chinese ownership of critical technology assets on national security grounds.
According to Reva Goujon, a director at the Rhodium Group, Nexperia was a prime target due to China's significant investments aimed at bolstering its domestic industries. Chinese companies, often backed by state-affiliated investors, have been aggressively acquiring foreign firms involved in chip manufacturing and other technologies. Although Chinese chip makers have struggled to produce cutting-edge technology, they have carved out a significant share of the market for older chips, which are still crucial for many applications.
In the wake of the Dutch government's takeover of Nexperia, China's Ministry of Commerce quickly responded by imposing restrictions that barred Nexperia’s Chinese units from exporting certain products. In a statement, Nexperia indicated that it is seeking an exemption from these controls and is utilizing all available resources to achieve this goal. Meanwhile, the Ministry of Commerce has publicly criticized the U.S. actions, stating that they have "seriously undermined the security and stability of the global industrial supply chain."
Additionally, the Dutch government's takeover has been labeled as a clear example of how American policies can harm the legitimate interests of Chinese companies. Beijing has also taken steps to tighten its grip on critical minerals essential for various technologies, closely mirroring American technology controls that it has long criticized.
As the rivalry between Washington and Beijing continues to escalate, experts like Goujon suggest that governments worldwide will persist in their efforts to regain control over critical technology manufacturing. “This has been building for a long time,” she noted, emphasizing the growing unease among nations regarding reliance on foreign ownership of essential tech assets.
In summary, the ongoing tussle over Nexperia not only signifies the tensions between the U.S. and China but also marks a pivotal moment in the global struggle for control over technology supply chains. As nations reassess their positions, the landscape of the semiconductor industry may undergo significant transformations in the coming years.
