Key Points
- The Dutch government seized Nexperia due to fears that its former CEO was moving production to China.
- The former CEO allegedly planned to lay off 40% of the European staff.
- He had also allegedly already transferred chip designs and other secrets to a factory in China.
- The government takeover led to a standoff, with China blocking Nexperia’s exports.
The Dutch government’s dramatic decision to seize control of chipmaker Nexperia in September was driven by fears that the company’s former CEO was actively dismantling its European operations and moving production to China. Four sources familiar with the government’s thinking revealed the details on Monday.
The standoff over the Chinese-owned company has already sent shockwaves through the auto industry, with carmakers warning of potential chip shortages. Although Nexperia makes very basic chips, they are used in huge numbers in cars and other electronics.
According to the sources, Nexperia’s former CEO, Zhang Xuezheng, who is also the founder of its Chinese parent company, Wingtech, had plans to lay off 40% of the European staff and shut down a research facility in Munich. Even more alarmingly, he had already allegedly transferred company secrets, including chip designs and machine settings, from a Nexperia plant in the UK to a Wingtech-owned factory in China. Equipment from the company’s Hamburg plant was reportedly next on the list to be moved.
This prompted the Dutch government to take the “highly exceptional” step of seizing control of the company on September 30. China retaliated by blocking exports of Nexperia’s products, creating a major headache for the company, which packages about 70% of its chips in China.
For now, the Dutch government is hopeful it can negotiate a resolution with Beijing to restore the company to a unified Dutch-Chinese structure.
