How a Dutch Takeover of Chip-Maker Nexperia Sparked a Global Supply Crisis

The Dutch government took control of Nexperia, a Chinese-owned chipmaker, on September 30, 2025, using emergency powers to prevent what officials called serious threats to Europe's technology security. The move has sparked a cross-border crisis affecting global chip supplies.

Dutch authorities discovered that Nexperia's European operations were being systematically dismantled and that valuable manufacturing secrets had been transferred to Chinese competitors linked to the company's ousted CEO, Zhang Xuezheng. These "process recipes" (the detailed instructions for making semiconductor chips) were taken from Nexperia's UK facility and shared with a competing Chinese firm. Meanwhile, plans were underway to move production capacity from Europe to China.

The government used the Goods Availability Act, a rarely invoked law that allows the state to block corporate decisions that threaten the supply of critical goods. Dutch courts also suspended Zhang from his leadership positions as an emergency measure.

China's Ministry of Commerce retaliated by blocking most exports of Nexperia components made in China starting October 4. This created a major problem because Nexperia's production chain spans continents: chips are partially made in Europe, then sent to China for final assembly and testing, before being shipped worldwide. Nexperia's Chinese unit even told employees to follow local Chinese directives rather than orders from the company's headquarters in the Netherlands, creating confusion about who actually controls the company.

Nexperia doesn't make the advanced processors that power smartphones or AI systems. Instead, it produces high-volume basic components (diodes, transistors, and power chips) that are essential for cars and consumer electronics. If these parts stop flowing, automobile manufacturers are among the first to feel the impact. Industry analysts warn that the standoff poses growing risks to car production in Europe and Japan.

The Netherlands did not nationalise (permanently take ownership of) Nexperia. Instead, it installed state oversight with the power to veto or reverse decisions that threaten Europe's access to critical technology. This includes blocking executive appointments, asset sales, relocations of facilities, or transfers of intellectual property (trade secrets and manufacturing knowledge). The government's stated goal is to preserve chip-making capabilities in Europe, not to run the company permanently.

Wingtech, Nexperia's Chinese parent company, has warned that losing control could create an "existential threat" if the situation isn't resolved by year-end. The export restrictions from China have disrupted operations and delayed salary payments in some parts of the business.

The Dutch government is now negotiating with Beijing and briefing EU partners to find a diplomatic solution. European officials view this case as a test of the continent's willingness to protect strategic technology from foreign control.

Governance reform: The Dutch government will likely maintain oversight until new safeguards are in place, including independent board members and strict controls on how intellectual property is shared within the company.

Lifting export restrictions: Any lasting solution requires China to remove its export blocks so that chips can move freely through Nexperia's production chain. This will likely require a political agreement between governments.

Protecting European technology: New requirements will probably mandate that manufacturing secrets remain under European legal protection, with monitoring systems to prevent unauthorized transfers.

Supply chain backup plans: Meanwhile, carmakers and electronics companies are identifying alternative suppliers and building more production capacity in Europe to reduce dependence on any single country.

This intervention signals a fundamental shift in how Europe handles foreign ownership of strategic technology companies. Allegations that a Chinese parent company was deliberately hollowing out its European subsidiary and stealing trade secrets prompted the Dutch government to act swiftly. What began as a corporate governance dispute has become a supply chain emergency affecting industries worldwide. Unless governments reach an agreement, the consequences could extend from courtrooms to factory floors—proving that even the smallest chips can create the biggest disruptions.