On Tuesday, October 14th, court documents revealed that before the Dutch government took over the chip manufacturer Nexperia, US authorities had raised concerns about the company’s Chinese CEO.
According to the documents, US officials warned the Dutch government in June that if Nexperia’s Chinese CEO, Zhang Xuezheng, continued to hold his position, the company might not be able to export products to the US.
On Sunday, October 12th, the Dutch government announced that it had invoked a Cold War-era law to take over Nexperia, citing “significant defects that could jeopardize” the security of supplying chips to European factories.
At that time, Zhang Xuezhang had already been suspended by Nexperia, which is controlled by the Chinese company Wingtech Technology. The Netherlands was concerned that the company might transfer technology to Wingtech Technology.
Last year, the US government put Wingtech Technology on the Entity List, which designates companies as a threat to national security. The reason was that Wingtech Technology was suspected of assisting the Chinese government in acquiring entities with sensitive semiconductor manufacturing capabilities.
30% of Wingtech Technology’s shares are held by the Chinese government and regional governments, as well as affiliated investment funds. In 2018, the company acquired Nexperia from the Dutch consumer electronics company Philips.
On September 30th, the Entity List was expanded to include subsidiaries of Wingtech Technology, which means Nexperia will face US trade restrictions by the end of November.
According to a report by The Guardian, a preliminary court ruling made public on Tuesday included details from a meeting on June 12th. During the meeting, the US Bureau of International Security and Nonproliferation informed the Dutch Ministry of Foreign Affairs that “the CEO of the company (Nexperia) is still controlled by the same Chinese shareholder, which is itself a problem. It is almost certain that to be removed from the Entity List, the CEO must be replaced.”
Documents released by the Amsterdam Commercial Court on Tuesday show that the Dutch Ministry of Economic Affairs had informed Nexperia on June 5th that new US regulations might be forthcoming and the company should take action. “All relevant personnel are aware that being on the US blacklist could have a significant negative impact on Nexperia and its business,” the company stated.
As tensions between the US and China escalate, China on Tuesday banned Nexperia and its subcontractors from exporting components assembled in China.
Nexperia stated that it is facing export restrictions from both the US and China and is seeking negotiations. The company mentioned that a new interim CEO had been appointed after former CEO Zhang Xuezheng was dismissed based on a court order in the Netherlands.
Nexperia is one of the world’s largest basic chip manufacturers, producing products such as transistors with high demand but low technical content. While the company’s largest production base is in Hamburg, Germany, most of its chips are packaged and assembled in China, eventually forming larger products.
The Dutch government stated on Tuesday that its intervention in Nexperia’s decision was not influenced or pressured by the US.
Eighteen months ago, the UK government, for security reasons, demanded that Wingtech Technology sell 86% of its stake in a silicon chip factory in Newport, Wales, which is the largest chip factory in the UK.
(This article is referenced from reports by The Guardian and Reuters)