Dutch government takes control of a Chinese chipmaker, company shares tank

Wingtech Technology Co. plunged its daily limit of 10% after the Dutch government moved to exert control over its European unit Nexperia, an unusual move that risks inflaming tensions between China and Europe.

The Dutch government invoked the Goods Availability Act to take control of the Netherlands' car chipmaker in September, citing national security concerns. While Nexperia can continue regular production, the government can now block or reverse its decisions.

The Hague is demanding that Wingtech suspend changes to Nexperia’s assets, business or personnel for up to a year, a requirement that extends to its subsidiaries, the Chinese firm said in its own statement Sunday.

The unilateral move — which the Dutch government called “highly exceptional” — underscores growing scrutiny of Chinese-owned companies active in sensitive sectors, including semiconductors. Washington added Wingtech, which acquired Nexperia via a $3.6 billion deal in 2018, to its Entity List last year. In 2022, the British government ordered Wingtech to undo its acquisition of Britain’s biggest microchip factory more than a year after the deal closed.

On Sunday, the Dutch government said the Chinese company — a key supplier to the automotive and consumer electronics industries — showed “recent and acute signals of serious governance shortcomings.”

“These signals posed a threat to the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities,” it said without elaborating. “Losing these capabilities could pose a risk to Dutch and European economic security.”

Little-known before its ventures into Europe, Wingtech once styled itself one of the world’s biggest smartphone manufacturers.

Founded in 2006 by Zhang Xuezheng, a former engineer-turned-executive for ZTE Corp., Wingtech started out much like iPhone-assembler Hon Hai Precision Industry Co. It made devices on behalf of other brands, before trying to build up semiconductor capabilities, including in chip design, manufacturing and packaging.

Wingtech said a Nexperia executive filed a court petition in the Netherlands this month, seeking to initiate an investigation and work out interim measures. The court has since suspended Zhang from continuing in his roles at Nexperia, including as executive director, until a probe is completed.

In 2023, the Netherlands also investigated Nexperia’s proposed acquisition of chip firm Nowi Energy BV. That deal later won approval.

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