Amid escalating controversy between China and the Netherlands over control of a Chinese-owned conglomerate, Nexperia, a semiconductor company based in the Netherlands, informed its employees in China that it is now operating independently, disregarding instructions from its Dutch headquarters. Reports from Chinese employees reveal a state of chaos within the company.
According to an internal memo issued by Nexperia’s China division to all employees on last Friday, the directive stated that Chinese employees should not follow instructions from the Dutch headquarters but should instead adhere to directives from the Chinese domestic company.
The memo stated that Nexperia China will operate independently as a Chinese enterprise, making independent operational and decision-making decisions.
“For any external instructions not authorized by Nexperia’s China legal representative – even if communicated through email systems like Outlook, Teams, etc. … you have the right to refuse to execute,” the memo read.
Nexperia China also advised employees to contact the human resources department if they receive notifications from “external individuals” or face “external pressure.”
This memo was a response to an email sent by the Dutch headquarters to all employees of the Chinese division earlier. On the same day, Nexperia China informed clients in an external notice that they have received instructions from their headquarters to cease salary payments and have their employees’ company system access fully cut off.
Nexperia China stated in the client notice that “the Chinese market has been abandoned by the current European management.”
In response, Nexperia’s parent company, China-based Wingtech Technology, stated that Nexperia China has taken “independent self-rescue” actions by establishing local supply chains to maintain serving domestic clients.
Nexperia China promised employees in the notice that the company’s operations remain “completely normal” and that salary payments will continue.
This move follows the Dutch government’s takeover of Nexperia, showcasing a resistive action by the Chinese entity against the company’s headquarters and the Dutch government under pressure.
The Dutch headquarters strongly opposed the internal memo released by Nexperia China, claiming that the memo’s mention of “abandoning the Chinese market” and the Chinese factories operating independently under a “new entity” are untrue.
The headquarters informed the Financial Times that these were “lies.”
In a statement, the headquarters said, “We regret that some individuals (referring to the Chinese management) are spreading these lies and hope to find a solution that allows Nexperia to continue serving its customers and partners and providing stability for employees.”
A Nexperia China employee who wished to remain anonymous told the Financial Times, “We are currently in a state of great turmoil internally, and the situation is very unclear.”
The Dutch company’s basic chips are widely used in automotive electronic systems, controlling various equipment from lighting, safety airbag systems to car door locks, and windows.
Nexperia was sold to a Chinese consortium in 2017 and acquired by Chinese enterprise Wingtech Technology Group in 2019.
While Nexperia produces semiconductor wafers in Germany and the UK, 80% of its final products are processed in China. Company registration documents show that Wingtech Technology owns the Nexperia entity based in the Netherlands, which then controls the Chinese subsidiary.
The Dutch government has accused Nexperia’s CEO and executive director, Zhang Xuezheng, of secretly transferring Nexperia’s business and intellectual property from Europe to China, violating contracts and jeopardizing critical technical knowledge and Nexperia’s manufacturing and development capabilities in the Netherlands and Europe. Zhang also serves as Wingtech Technology’s CEO.
Earlier this month, based on the Dutch Trade and Industry Act, the Dutch government requested Nexperia and its global affiliates to make adjustments to assets, intellectual property, business, personnel, etc. within one year.
At the same time, the Enterprise Chamber of the Amsterdam Court of Appeal initiated an investigation into the company upon receiving a lawsuit against Nexperia’s top executives. The court ordered the temporary suspension of Zhang Xuezheng’s CEO position at Nexperia during the investigation and appointed a temporary non-executive director with decisive voting rights while transferring the majority of Nexperia’s shares to a court-appointed administrator for management.
Subsequently, the Chinese Ministry of Commerce retaliated against the Dutch government’s actions by imposing comprehensive restrictions on Nexperia’s chip exports. This measure has begun impacting the entire automotive supply chain, prompting some European car manufacturers to reactivate their “COVID-19 response strategy” in the face of imminent automotive chip shortages.
The Dutch Ministry of Economic Affairs stated on Monday that Minister Vincent Karremans will meet with Chinese Foreign Minister Wang Wentao in the coming days to discuss Nexperia’s issues.