The US pressure forced the Netherlands to take control of a Chinese microchip manufacturer

Dutch court documents show that the government seized Chinese microchip maker Nexperia after the United States warned it would have to replace its CEO with a Chinese one to avoid being placed on a sanctions list.

Bloomberg writes about this.

“It is almost certain that the CEO will have to be replaced to qualify for removal from the list of organizations,” the US Bureau of International Security and Nonproliferation told the Dutch Ministry of Foreign Affairs in June.

That warning set off a chain of events that led to the takeover of Nexperia in late October. The government then invoked the Goods Availability Act, claiming it was trying to prevent the company’s products from becoming unavailable in an emergency. The law was enacted during the Cold War and had never been used before.

CEO Zhang Xuezhen was removed from his position after a court ruling. He founded Nexperia’s parent company, China’s Wingtech Technology Co., and together with his family controls 15.4% of the shares. The judges said Zhang failed to take steps to protect Nexperia from the threat of US sanctions by failing to make management changes that would have helped protect the subsidiary.

In a ruling by the Business Chamber of the Amsterdam Court of Appeal, Zhang was accused of allowing the company to place unnecessary orders worth up to $130 million with a Chinese company this year. The ruling, citing internal reports, said that most of the Chinese semiconductor wafers purchased would not be processed. Instead, they would be stored in a warehouse until they became obsolete. This means that Nexperia effectively placed orders for scrap metal.

Beijing imposed export controls on Nexperia in response to the government takeover. The Chinese Chamber of Commerce to the EU said Dutch authorities had “committed a modern act of economic banditry”.

• The United States and Britain have already imposed restrictions on Nexperia and its parent company Wingtech. Washington last year accused Wingtech of helping China acquire sensitive semiconductor technology. American companies must obtain a license to sell Wingtech’s technology. Those license requests are often denied. Last month, the White House expanded the rules to include subsidiaries such as Nexperia on the blacklist.
• In January 2023, a journalistic investigation by NOS and Nieuwsuur reported that Russia was buying chips from the Netherlands through Chinese intermediaries. Among them were Nexperia chips. The report claimed that a small group of Chinese companies were buying chips in the Netherlands and then exporting them to Russia. The companies, in turn, claimed that they were complying with sanctions rules and were not doing business with Russia.

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