Onus on Dutch to resolve its Nexperia dilemma

The Dutch government's rash decision on Sept 30 to take over Nexperia, a semiconductor producer based in the Netherlands and owned by the Chinese parent company Wingtech, set off a chain reaction across global automotive supply chains. In Germany, a powerhouse of global car manufacturing, a Deutsche Welle report found that companies are so short of chips that "Volkswagen says it expects work stoppages if an alternative isn't found".

This crisis did not emerge organically from market forces, nor from any instability within Nexperia. It was created by the Dutch side's unjustified action.

As China's Ministry of Commerce pointed out on Friday, the global semiconductor supply chain had been stable and secure prior to the Netherlands' unwarranted action. The root cause and responsibility for the current disruptions in the global semiconductor supply chain lie with the Dutch side. It is the Dutch government's inappropriate interference in corporate operations that introduced the disruption that has now shaken the stability of the global semiconductor supply chains.

Yet rather than presenting a pathway to end the crisis, Dutch Minister of Economic Affairs Vincent Karremans chose in an interview on Thursday to publicly defend the Dutch government's extraordinary takeover of Nexperia, declaring that on the basis of the information he had now, he would do the same thing again.

Responding to Karremans' remarks on Friday, a spokesperson for the Ministry of Commerce expressed China's "extreme disappointment and strong dissatisfaction" with them, saying they "confuse right and wrong, distort facts and persist with a single-minded course".

In the interview, Karremans said the Dutch government had received intelligence that Nexperia's Chinese CEO was "moving away intellectual property rights". If such unfounded charges suffice to prompt the Dutch government to take over the company, which is apparently a maneuver under external pressure, it sets a bad precedent showing the extent to which the business environment of the Netherlands can be politicized.

It is worth remembering that Nexperia's predecessor was a division of the Dutch semiconductor giant NXP, and the company did not see annual sales exceed $1 billion until after Wingtech acquired it in 2018. Nexperia's 2024 Sustainability Report shows its total sales rising steadily from $1.43 billion in 2020 to $2.06 billion in 2024.

It was the Chinese company's acquisition of the business that enabled the company to grow into a major supplier across Europe and the United States. It is the Dutch government's interference in corporate operations with its abuse of the Goods Availability Act, which was enacted in 1952 but never before used, that has disrupted the company's production and threatened supply chains in Europe and beyond.

A look back at the developments around Nov 7 shows that on that day, Bloomberg News, citing people familiar with the matter, reported that "the Dutch government is ready to shelve the order that gave it power to block or change key corporate decisions" at Nexperia if China resumes exports of critical chips.

The following day, European Commissioner for Trade and Economic Security Maros Sefcovic issued a statement on X, praising the efforts made by both China and the Netherlands and vowing to "work towards a lasting, stable, predictable framework that ensures the full restoration of semiconductor flows".

A day later, a spokesperson for China's Ministry of Commerce stated that, acting out of a responsible commitment to global semiconductor supply chain stability and security, China had adopted concrete measures to grant exemptions to the worldwide ban that it had imposed on exports of chips from Nexperia's plant in China at the start of October for compliant civilian-use exports.

Karremans' remarks have served to undo much of those efforts. His insistence on defending a clearly flawed decision signals that some in the Dutch government are more interested in political posturing than in resolving the crisis. Despite this setback, China has not closed the door to dialogue. Beijing has agreed to receive Dutch representatives for consultations, and has urged the Netherlands to "come with constructive solutions" rather than recycle old accusations.

To protect the automotive sector, restore trust and prevent further deterioration of the situation, the Dutch side must reverse its harmful course and recommit to market principles, contract integrity and genuine cooperation.