On Wednesday, the Chinese parent company of Dutch semiconductor manufacturer Nexperia, Wingtech, lost a legal battle in the fight for control over the chip maker. The Amsterdam Chamber of Commerce ordered an investigation into Nexperia’s operations and upheld the suspension of the company’s CEO, Zhang Xuezheng.
Last September, Vincent Karremans, the caretaker Minister of Economic Affairs in the Netherlands, invoked a previously unused 1952 law for reasons of national security, placing Nexperia under state supervision, sparking tensions between the Netherlands and Beijing. This law granted Karremans broad powers to overturn any decisions of companies that could potentially transfer production or technology overseas.
The court stated in a press release on Wednesday, “There are ample reasons to question the company’s sound business policies and actions, and has ordered an investigation.” The court will appoint two investigators to prepare a report on the company’s operations.
This investigation is expected to prolong the struggle for control over Nexperia. The court did not specify the duration of the investigation but indicated that such inquiries could last for more than six months.
The court’s press release stated, “On Wednesday, the Corporate Court found signs of negligent behavior involving conflicts of interest.” The court added, “Additionally, there are indications that Nexperia’s directors, faced with impending sanctions, changed the company’s strategy without consulting other board members; agreements with the Dutch Ministry of Economic Affairs were no longer being adhered to, European officials’ powers were curtailed, and they announced resignations.”
The investigation will also include the actions of Nexperia’s Dutch management, which approved a crucial request from Wingtech.
The Amsterdam Court of Appeal also upheld the previous decision to suspend CEO Zhang Xuezheng, transfer power to the EU directors, and investigate allegations of mismanagement.
The Dutch government temporarily took over Nexperia last September, citing Zhang Xuezheng’s actions as a threat to Europe’s supply chain security. His shares were transferred to a trust fund, but he retained financial interests.
Nexperia is a key supplier of basic semiconductors, mass-producing transistors extensively used in various fields of automobiles, from lighting to electronic equipment.
On Wednesday, Nexperia welcomed the court’s ruling and expressed willingness to cooperate with the investigation.
Wingtech, the Chinese parent company of Nexperia, stated its belief that a fair investigation will demonstrate the appropriateness of its actions, aligning with the best interests of the company and its stakeholders.
After the Dutch court took action against Nexperia last year, Beijing swiftly imposed export restrictions on Nexperia’s Chinese-manufactured products, affecting the global automotive industry. However, these restrictions were relaxed following a meeting between US President Trump and Chinese leader Xi Jinping.
The Dutch government later suspended its intervention, but the court’s measures remained in effect.
Subsequently, Nexperia’s European management and Chinese owners accused each other of improper conduct, with both parties denying the accusations.
Nexperia accused Wingtech of hijacking the company’s Chinese operations and intentionally destabilizing the company. Meanwhile, Wingtech accused Nexperia’s interim management of disrupting operations, damaging the supply chain, and requested the court to revoke its measures.
On Wednesday, the court rejected Wingtech’s request and stated it would extend the measures taken against the company last year. The court emphasized, “Nexperia’s top priority at the moment is to stay calm to restore its internal relationships, production chain, and customer deliveries.”
Last year, the US government expanded the list of companies posing national security risks, including foreign subsidiaries of some listed companies, which led to the Dutch government’s intervention in the Nexperia issue. Initially, Wingtech was included in the US list, suggesting that Nexperia may face similar export restrictions as its parent company.
After the meeting between Trump and Xi, Trump agreed to suspend the expanded export restrictions for one year.
Karremans previously stated that Nexperia Semiconductor had “serious governance defects” that could threaten Europe’s technological secrets and production capacity.