In an intensifying geopolitical battle over high technology involving the United States, China, and the Netherlands, the CEO of a leading chip company has become a focal point, prompting the Netherlands to take the unusual step of suspending his position and assuming control of the company.
On Sunday, the Dutch government announced that it had resorted to a Cold War-era law to take over chipmaker Nexperia, sidelining its CEO, Zhang Xuezheng, and appointing an independent individual to replace him and represent the company.
Nexperia, a manufacturer of affordable semiconductors for cars and consumer electronics, is a subsidiary of China’s Wingtech Technology, which was added to the United States’ “Entity List”—a trade blacklist—late last year.
In a Dutch court ruling, Wingtech Technology temporarily lost its shareholder rights (including governance and voting rights) over 99 percent of Nexperia’s shares, with one share retained.
While Nexperia will continue its semiconductor manufacturing, the Dutch government now has the authority to override its decisions.
This unusual action comes hot on the heels of the Trump administration expanding U.S. sanctions to include subsidiaries of entities already on the blacklist, highlighting intensified scrutiny of Chinese-owned firms in sensitive sectors.
According to a court ruling disclosed on Tuesday, the U.S. Bureau of Industry and Security informed the Dutch Ministry of Foreign Affairs in June that “it is almost certain that the CEO will have to be replaced to qualify for an exemption from the Entity List.”
Wingtech Technology issued a statement on Sunday strongly opposing what it called the “politicization of commercial issues” and the “discriminatory treatment of Chinese-funded enterprises.”
On Tuesday, Nexperia said in a statement that, earlier this month, China’s Ministry of Commerce issued an export control notice prohibiting Nexperia China and its subcontractors from exporting certain components. Nexperia stated it is seeking an exemption.
First Use of Dutch Cold War Law
On Sunday evening, the Dutch Ministry of Economic Affairs released a statement explaining this unprecedented intervention. It said that, due to the “significant scale and urgency of administrative shortcomings” at Nexperia, the ministry decided to activate the Goods Availability Act for the first time, a measure reserved for wartime or disaster scenarios.The ministry had noticed signals that “posed a threat to the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities.”
“Losing these capabilities could pose a risk to Dutch and European economic security,” the statement continued, noting that the measure is “intended to mitigate that risk.”
Who Is Zhang Xuezheng?
Zhang, 50, is a Chinese entrepreneur and a leading figure in the semiconductor industry. He is the founder, president, and CEO of Wingtech Technology, as well as the chairman and CEO of its subsidiary, Nexperia.As a billionaire, Zhang has been listed on the Forbes Global Billionaires List and the Hurun Global Rich List.
He has significant ties to the Chinese Communist Party (CCP). These connections are primarily through his company's state-backed ownership structure and his political affiliations.
Why Nexperia Is Targeted
Unlike ASML's expensive chip machines, what Nexperia manufactures are cheap, simple transistors in large quantities, producing more than 100 billion units per year with an annual turnover of €2.06 billion ($2.39 billion).Initially, Nexperia seemed not to be sucked into the vortex of the tech war between the United States and China, which focused on high-end chips and advanced chip equipment. But during the coronavirus pandemic, even simple semiconductors became crucial, which could lead to car manufacturers shutting down production lines.
The United States and Europe are becoming more cautious of Chinese high-tech companies. In 2022, the UK government ordered Wingtech Technology, through its company Nexperia, to sell 86 percent of its ownership in Newport Wafer Fab, the UK’s largest silicon wafer factory in Wales, due to national security concerns about sharing sensitive technology with China, especially since Wingtech has ties to the Chinese regime.