The Dutch government decided in September to take over the chip manufacturer Nexperia, with the key figure behind this important decision, Dutch Minister of Economic Affairs Vincent Karremans, stating that he wouldn’t change the decision if given another chance. He likened the dispute to an economic thriller.
The Guardian published an interview with Karremans on Thursday, detailing the Nexperia dispute for the first time, along with his negotiations with German counterparts, the automotive industry, and senior officials in the United States. He mentioned that crucial intelligence indicated Nexperia’s Chinese CEO was transferring some physical operations to China.
Karremans stated that the six-week stalemate between the EU and Beijing over Nexperia and its critical reliance on semiconductor supply for the automotive industry sounded an alarm for leaders worldwide about the risks of dependence on China.
“We all want to know what really happened,” he said. “It’s like an economic thriller.”
He added, “If I were in the same position today with all the information I have, I would make the same choice.”
China’s Ministry of Commerce expressed strong dissatisfaction with Karremans’ latest remarks on Friday. China has been pressuring the Netherlands to revoke its takeover order of Nexperia.
According to a statement from the Dutch government on Thursday, a Dutch delegation will head to Beijing early next week to seek a solution to the Nexperia issue that is acceptable to both sides.
Nexperia was acquired by China’s WingTech Technology in 2018. In 2023, the United States notified the Dutch government about considering WingTech for inclusion in the “associated enterprise list” that could pose a threat to national security.
In the same year, the Dutch government engaged in dialogue with WingTech founder and Nexperia CEO, Zhang Xuezheng, to ensure the independence of Nexperia.
The Netherlands demanded Nexperia to establish an independent supervisory board and prohibited Zhang from holding dual roles as CEO and HR director.
Karremans said, “Last summer, I discussed this issue with Mr. Zhang at the Ministry of Economic Affairs. At that time, he assured me that the board fully supported it. We outlined a list of measures to be taken and were preparing to communicate with the U.S., emphasizing it was a Dutch company.”
However, in September, the situation took a dramatic turn.
“Someone came to my office and said, ‘Minister, we need to talk.’ And these people informed me of what Zhang was doing: transferring intellectual property, laying off employees, and planning to move production from Hamburg to China,” Karremans said.
The minister declined to reveal the identity of the informants but emphatically stated, “We have compelling evidence that this transfer is indeed underway.”
According to a letter sent by the minister to the Dutch parliament in September, serious allegations of governance flaws within Nexperia were received by the Dutch government, all related to Zhang Xuezheng.
On September 30, citing the risk to “European economic security,” the Netherlands took over the regulatory authority of Nexperia’s company. The Dutch government activated a law reminiscent of the Cold War, which had never been used before.
Karremans stressed that the action taken was in no way related to the U.S. listing Nexperia on the export control entity list on September 29. “We absolutely did not receive any prompting or pressure from the U.S.”
He said the Dutch government was notified by the U.S. due to their impending government shutdown, seeking confirmation from the Netherlands regarding Nexperia being added to the new export control list.
The Dutch government’s takeover action sparked a strong reaction from Beijing, prompting China to implement a four-day ban, prohibiting the export of Nexperia semiconductor chips (mostly finished products) from China. This move immediately disrupted the automotive manufacturers supply chain.
Following an agreement reached between U.S. President Trump and Chinese leader Xi Jinping in South Korea at the end of October, Beijing agreed to resume supplying Nexperia chips to Europe.
After the decision to intervene with Nexperia, tensions escalated between the Netherlands and China. Karremans spoke with German Minister of Economic Affairs Katherina Reiche. The German minister expressed support for the Dutch action but also expressed concerns about the potential impact on the automotive industry.
Soon, leaders from the EU, the U.S., China, France, and around the world were informed of the developments.
The Dutch Minister of Economic Affairs stated, “We didn’t plan to make this public, we wanted to resolve the issue quickly and quietly.”
Currently, the U.S. has decided to suspend sanctions against companies on the subsidiary list (delaying 50% penetrative measures by a year), and Beijing also announced the resumption of chip supply from Nexperia.
Regarding the possible future developments, Karremans noted that no action would be taken until the first batch of chips arrives in Europe.
“Once the supply is restored, and we are confident it can continue, then… we will take the appropriate measures that the Dutch government needs to resolve this issue,” he said.
Karremans hopes that this incident will “ring the alarm bell” and raise awareness of the dangers of over-reliance on a single country for crucial technology or raw materials.
Karremans told The Guardian that if WingTech were to transfer Nexperia’s wafer production line to China, then “the interdependence relationship between Europe and China would turn into complete dependence… This could be extremely dangerous for Europe.”
His Liberal Party (VVD) ranked third in the October elections, and he will step down after the new government is formed, which may take up to a year.
The Guardian stated that WingTech denied rumors of plans to move part of the physical production line from Hamburg to China, citing the suspension of investment plans in Germany due to the intervention by the Dutch government.
Earlier on Friday, Nexperia’s Chinese factory issued a collective letter to all employees, stating the headquarters’ “cut-off” of wafers was disrupting production at the Chinese factory and failing to provide the necessary support and fund allocation as per the agreement.
Nexperia headquarters later refuted the allegations of cutoff in a statement, mentioning that despite export restrictions imposed by the Chinese government in October, the headquarters continued to directly supply wafers to the Chinese factory.
The headquarters also indicated that the Chinese entity of Nexperia has enough wafer and finished product inventory to sustain operations for several months.
“Any responsibility for unfulfilled shipments should be borne by the Chinese entity of Nexperia,” the statement read.
The headquarters of Nexperia also mentioned that while there has been progress, the Chinese government has only provided an exemption for Nexperia chips from export restrictions and has not fully restored Nexperia’s supply chain yet.