The Ministry of Economic Affairs (EZ) intervened at chip manufacturer Nexperia because the Chinese owner Wing, in the eyes of Dutch officials, stole trade secrets from a British factory and was about to dismantle the European branch of the company. Several insiders confirm this NRC.
On September 30, Minister of Economic Affairs Vincent Karremans (VVD) froze Nexperia’s business operations through the obscure Availability of Goods Act of 1952. Since then, the Chinese parent company Wingtech, owned by entrepreneur Zhang Xuezheng (Wing), has no longer been able to move business units or machines. The controversial intervention led to an export ban from China and possible production problems for car manufacturers, because their suppliers no longer receive Nexperia chips. Wing accuses the Netherlands of acting on behalf of the US to thwart China. The ministry insists: the US is outside it; Europe was in danger of losing chip factories and knowledge.
Self-enrichment
Nexperia, which has a head office in Nijmegen, makes cheap chips that are used in all kinds of electronics. The wafersround disks on which these chips are made, are produced in Manchester and Hamburg. The majority of those chips are processed by a back-end factory in Dongguan, China.
Wing wanted to move wafer production entirely to China and place it with another of his companies, WingSkySemi. To do this, he appropriated the recipes for the production of chips from the Nexperia factory in Manchester, British, which makes ‘mosfets’ – simple switches. Although this is common technology, it concerns trade secrets that were unauthorized shared with the Chinese competitor – Wing’s own company. The conclusion of Dutch officials: the CEO enriched himself by having Nexperia place excessively large orders at his own chip factory and siphoned off knowledge. Karremans intervened to maintain production for Europe.
Conversations conducted by NRC show that EZ made the controversial decision under great time pressure, because Wing threatened to dismiss 40 percent of its European staff and wanted to close Nexperia’s research center in Munich. The plans for this had already been shared with the works council.
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Geopolitics
Until last summer, Wing had helped to give Nexperia a more European management, to allay concerns among customers and governments about Chinese influence on the chip manufacturer. But in July, Wing appointed Chinese stooges to empty Nexperia. The reason for Wing’s actions was geopolitical pressure; his company Wingtech Technologies had already been blacklisted by the Americans; the US also started to apply this restriction to subsidiaries – including Nexperia.
To the outside world it appears that the Dutch state made the decision under pressure from the Americans. But Minister Karremans previously called it “pure coincidence” that tightened American trade restrictions were announced on the same day that the minister gave the order.
The Chinese ambassador was immediately warned as soon as Karremans made the decision. China responded with an export ban for the factory in Dongguan, and since then Economic Affairs has been consulting with China almost daily about a possible solution. The factory in Dongguan is now no longer under the control of the Dutch headquarters, but is running at half capacity because the number of wafers from Europe is decreasing. Deliveries are still being made to Chinese customers.
Enterprise Chamber
One day after the minister’s order, the judge also intervened at Nexperia. The Enterprise Chamber, a special division of the court that specializes in conflicts within companies, suspended the controversial director-owner and placed Nexperia’s shares under independent management.
The ministry was aware that dissatisfied Nexperia directors were considering going to court, but thought it was too risky to wait for a possible case. It was uncertain whether Nexperia itself would go to the Enterprise Chamber, whether directors would be dismissed prematurely and the question was how long a judgment from the court would take and what its content would be.
These interventions now appear to be duplicated, but Economic Affairs still considers it too risky to withdraw the exceptional order. Nexperia directors can decide at any time their withdraw the case or the judge may make a different decision in the meantime. The Enterprise Chamber has only made a provisional decision.
Officials themselves ‘discovered’ the never-used 1952 law. In their view, this was the only way to prevent Nexperia’s dismantling. More recent legislation that gives the minister the opportunity to block geopolitically sensitive takeovers could not be used because Nexperia had already fallen into foreign hands before that regulation.
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