China’s leading semiconductor association said on Tuesday the Dutch government was “abusing the concept of national security” in taking control of Nijmegen-based semiconductor maker Nexperia, a wholly owned subsidiary of Chinese company Wingtech.
After the Netherlands announced the move late Sunday, Wingtech shares fell the maximum allowed 10% in Shanghai trading on Tuesday before recovering for the second consecutive day.
How and why did the Netherlands government assume partial control of Nexperia?
The government announced the move late Sunday, saying the Netherlands invoked the country’s Goods Availability Act to take control of Nexperia in late September, citing national security concerns.
The company can continue regular production and operations, but its decisions can be blocked or reversed by the Dutch government.
The government said in its statement that it took the step due to “recent and acute signs of serious administrative deficiencies and actions” within Nexperia.
The company makes chips for cars and consumer electronics – including “wide gap” chips suitable for AI projects and other high-voltage, high-temperature uses. It was a subsidiary of engineering giant Philips until Wingate bought it in 2018 for €3.63 billion (about $4.2 billion at current exchange rates).
The Netherlands cited concerns about technology transfer to Wingtech in its statement.
Semiconductor shortages and availability issues have hampered a range of industries for many years, with the industry an increasing battleground for governments around the world.
China’s holdings in the industry are large and growing, although it still lags behind regional rivals such as Taiwan and South Korea, while US companies still lead the world in sales and the country plans to substantially expand its declining manufacturing capacity over the next few years.
China’s CSIA orders ‘selective and discriminatory sanctions’
The China Semiconductor Industry Association (CSIA) reacted critically to the Dutch move early on Tuesday, as share prices of Nexperia’s parent company Wingtech fell.
“We oppose the practice of abusing the concept of ‘national security’ and imposing selective and discriminatory sanctions on overseas branches of Chinese enterprises,” the CSIA said in a statement.
It added, “Discriminatory measures target specific enterprises with the aim of undermining an open, inclusive and collaborative global semiconductor ecosystem, and we strongly oppose such measures.”
A Foreign Ministry spokesman in Beijing made similar comments about China’s continued opposition to “normalizing the concept of national security.”
Earlier this week, Asian stock markets reacted uneasily to the news.
Wingtech Technology’s share price fell by the maximum allowed 10% for the second consecutive day and then stabilised. The CSI Semiconductor Industry Index was also down 6.9% in Tuesday trading.
Wingtech also on US radar, Netherlands says timing is coincidental
The US put Wingate on its “entity list” of companies seen as a threat to national security for its alleged role in “assisting the Chinese government’s efforts to acquire entities with sensitive semiconductor manufacturing capabilities” and last month expanded its list to include subsidiaries.
However, Reuters news agency quoted a spokesperson for the Dutch Ministry of Economic Affairs as saying that its Nexperia decision and the timing were “completely coincidental”.
Nexperia itself had said it would comply with the new US regulations and its Chinese parent company was kept at a distance.
WingTech called the Dutch intervention “excessive interference motivated by geopolitical bias”, and also accused non-Chinese officials of a “covert power grab” by trying to change the equity structure of the 100%-WingTech-owned company through the courts.
Wingtech and Nexperia also came under scrutiny in the UK in 2022, after the Chinese company used its Dutch subsidiary to acquire an 86% stake in Newport Wafer Fab, the UK’s largest microchip plant. The government later forced the company to be sold, considering Chinese ownership a threat to national security.
Edited by: Wesley Rahn