Netherlands suspends takeover of Nexperia, control issue remains to be resolved

The Dutch government stated on the 19th that it would suspend the takeover of Nexperia, which means that Nexperia and its 30 entities around the world are no longer in a "frozen" state. However, Chinese media pointed out that Zhang Xuezheng, the founder of Wingtech, the parent company of Nexperia, has not yet been reinstated in his position at Nexperia, and 99% of Wingtech’s shares are still under trusteeship.

Nexperia is an important supplier of automotive chips. The dispute between the Netherlands and China has caused a shortage of Nexperia chips, which has had an impact on the automotive supply chain, causing some car manufacturers to slow down or even suspend production.

Dutch Economy Minister Vincent Karremans said on the 19th that the government’s suspension of the takeover was a show of goodwill and emphasized that negotiations between the two parties will continue. He said in the statement: "We positively recognize the measures China has taken to ensure the supply of chips to Europe and the world."

Caixin reported that the Dutch government has suspended orders issued against Nexperia under the Goods Availability Act, which means that Nexperia and all its subsidiaries, branches, offices and other 30 entities around the world can adjust their assets, intellectual property rights, business and personnel, etc., and are no longer in a "frozen" state.

The report mentioned that Karemans said in a statement that the reason for the previous activation of the "Goods Availability Act" stemmed from concerns about the behavior of Zhang Xuezheng, the now suspended CEO of Nexperia, who was suspected of improperly transferring product assets, funds, technology and knowledge to foreign entities. Such behavior goes against the interests of the company and undermines the strategic autonomy and supply chain security of the Netherlands and Europe.

This is the first time the Availability of Goods Act has been enacted since 1952. Karremans said this was a special measure that would only be used in situations where key national and European interests could not be adequately protected by other means.

Reports pointed out that the orders issued by the Dutch government under the Goods Availability Act are independent of the rulings made by the Dutch Corporate Court. At present, the Dutch Corporate Court has not made a new explanation on its ruling, which means that Wingtech founder Zhang Xuezheng’s position at Anshi has not been restored and 99% of Wingtech’s shares are still under trusteeship.

On September 29, the Bureau of Industry and Security (BIS) under the U.S. Department of Commerce issued the "50% Penetration Rule for Export Controls", which requires that any company whose entities on the "Entity List" hold 50% or more of its shares will automatically be subject to the same export control restrictions as those on the Entity List. This makes Nexperia Semiconductor subject to US restrictions.

On September 30, the Dutch authorities issued an order to Nexperia, requiring Nexperia and all its subsidiaries, branches, offices and other 30 entities around the world not to make any adjustments to its assets, intellectual property rights, business and personnel within one year, which is equivalent to one year of obtaining control.

On October 1, Nexperia submitted an urgent request to the Dutch Corporate Court to initiate an investigation into the company and take provisional measures. The Dutch Corporate Court decided to suspend Wingtech Technology founder Zhang Xuezheng from his position at Nexperia and entrust Wingtech’s equity in Nexperia held by its subsidiary Yucheng Holdings Co., Ltd. to an independent third party in the form of management rights.

Faced with joint sanctions against a Chinese company by the United States and the Netherlands, China’s Ministry of Commerce issued an export control notice on October 4, prohibiting Nexperia China and its distributors from exporting specific finished components and components manufactured in China.

Wingtech and Nexperia China began to directly take over domestic production in China in mid-October and no longer obey the instructions of their overseas parent companies. Nexperia Netherlands and Nexperia China split, and the crisis over Nexperia control also triggered shocks in the global supply chain.

Karymans reiterated in a statement on the 19th that according to the trade agreement reached by China and the United States at the end of October, China will take measures to allow Nexperia’s factories in China to resume supply, thereby ensuring the supply of key global chip products. As for how to prevent similar incidents in the future, he said that strengthening the development of the European semiconductor industry is a priority for the Netherlands and the EU.

CCTV News reported that China’s Ministry of Commerce said in an unnamed spokesperson’s answer to a reporter’s question on the evening of the 19th that China welcomes the Dutch initiative to suspend the administrative order (Goods Availability Act). However, the Dutch Corporate Court’s “wrong ruling” depriving Wingtech of control over Nexperia is still the key to hindering the resolution of the problem.

Further reading: Affected by the Anshi crisis, Nissan's Kyushu plant is rumored to be planning to cut production again Anshi restarts supply, Honda North America factory reports to resume normal production on 24th Affected by Anshi and semiconductor shortage, Nissan cuts production at two Japanese factories Money is tight, Nissan's Yokohama headquarters sold to Taiwanese company for 97 billion yen China relaxes civilian exports of Nexperia chips, and global car factory supply is expected to stabilize It’s time for European semiconductors to wake up! Nexperia's crisis triggers supply chain restructuring, benefiting Taiwan's mature manufacturing processes The battle for Nexperia’s dominance raises concerns over the outflow of key semiconductor technologies to China Europe tightens controls on semiconductor smuggling into China, and the Netherlands rarely imposes controls on Nexperia Semiconductor