“The Nexperia Dispute: Lessons for Europe’s Economic Security”

“The Nexperia Dispute: Lessons for Europe’s Economic Security”

“The Nexperia Dispute: Lessons for Europe’s With​‍​‌‍​‍‌ the constant changes in the digital world, companies will find themselves compelled to make a lot of different changes if they are going to keep being successful

Companies with well-established content policies are more likely to be able to get closer to customer demands. As such, consistent two-way communications help to establish relationships of trust, but it doesn’t take great intelligence to realize that teams quite regularly find themselves battling against such a scenario.

We expect to see a new company in the running for the position of Dutch Trade Minister to Sjoerk Sjoerdsma. He was the Trade minister at the time of the China-Nexperia incident which led to tensions between China and the Netherlands in autumn 2025.

The meeting between the Netherlands Trade Minister, Sjoerd Sjoerdsma and the Chinese Minister for Commerce, Wang Wentao in July 2026, was marked by a friendly rapport. Such a friendly atmosphere may have come as a shock after tensions between the people and the authorities were at their peak following the dispute involving Nexperia in the autumn of 2025 “The Nexperia Dispute: Lessons for Europe’s

 

A change in the political landscape was not, however, likely to overshadow the commercial value of the Nexperia case which actually turned out to be a relatively well-balanced measure of economic security. Besides being a source of economic security intervention to be followed after the case, the Nexperia case is also a great indicator of Europe's economic security concerns.

During the July 2026 negotiations, the Chinese delegation called on the Dutch to “promote the proper resolution of disputes involving relevant companies,” hinting at the matter of Nexperia. Meanwhile, The Hague has signaled a preference for the legal process to carry on.

 

Wingtech, Nexperia's Chinese parent company, reports that Nexperia China has evolved into a standalone manufacturer. However, Nexperia forecasts the critical supply shortages in Europe to gradually subside by the year's end. China having leverage, it looks like the split of the company is inevitable but at least the European business has been saved.

A lot of uncertainty still lingers. Besides Wingtech's arbitration plea against the Dutch government claiming illegal expropriation, a judicial action may result in a permanent replacement of the company's top executives. On the other hand, misunderstandings in parts of the English-speaking media, China's attempts to spin the facts, and the occasional errors of Dutch ministers may cause Europeans to misinterpret the lessons of a case that is very important for economic security.

The Dutch economic affairs minister and Nexperia’s European management were defending the chipmaker from a very obvious threat to European economic security. In effect, they were standing up to Beijing's well-known tactic of using the power of pressure on the other side to push them back into round-table negotiations. While the minister's response was understandable, a more strategic preparation of the intervention would probably have been very helpful, especially considering that saving the company from its Chinese shareholders' continued dilution had to be done. Limiting the long-term damage will require the European governments to bear the disproportionately higher short-term costs Beijing can be imposing, while fully recognizing that almost any intervention will result in incomplete ​‍​‌‍​‍‌results.

In​‍​‌‍​‍‌ 2017, after Nexperia had just been founded, the company was sold to a joint venture formed by JAC Capital and Wise Road which are Chinese state-owned investment funds.

The same funds held a private auction one year later that was exclusively for Chinese bidders. To everyone’s surprise, Wingtech, a relatively small company without significant experience in the sector, was the winner of the auction. These transactions went relatively unnoticed until the EU launched its FDI screening framework. At which time the EU countries were mostly opening themselves to Chinese investment. The two other subsidiaries of Philips Semiconductors, the chip designer Goodix and the company of Ampleon, fell as well under Chinese ownership.

Even though they were supposed to implement safeguards against technology leakage in the acquisition, the old CEO, Frans Scheper, told on a radio program that Wang Yaxin of Wingtech had wanted from the very first to make Nexperia a company of China.

Almost all the top level European directors of Nexperia had no knowledge of the past of Mr. Zhang in China, where he was convicted to prison in 2005 for stealing trade secrets of ZTE illegally and then being fined in 2024 for missing disclosures of his shareholder activities going as far as 2017. The Dutch civilian intelligence service AIVD had already voiced concerns about Zhang in 2019, but it seemed nothing really came out of it.

The first external warning of Chinese influence came in the form of Nexperia unwinding its acquisition of a semiconductor plant in Newport after the UK government required the company to do so in November 2022.

The Dutch Economic Affairs Ministry talks with Nexpecia over what the management changes of the company could be in order to be deemed European were intensified after the ministry was approached following the placement of Wingtech on the Entity List of the U.S. government in December 2024 instead of dealing with the issue at stake.

After a time, the Europeans became more and more convinced that Zhang was acting in bad faith in several respects. Besides in China, Zhang was establishing parallel operations under his Wentianxia holding company through his WingSkySemi (WSS) at Shanghai fab. The Chinese owners even suspended the expansion of the Nexperia’s unfinished Malaysian assembly plant despite customers’ demand and Zhang was devoting more and more time and effort into China where his primary interests seemed to be.

Focusing on governance reforms has made the Chinese owners worried about the negotiations. They asked a Chinese lawyer for assistance. The problem arose when Wingtech was said to have violated Dutch company law by removing the European managers and giving control to their Chinese counterparts who had not been properly ​‍​‌‍​‍‌qualified.

Among​‍​‌‍​‍‌ the lesser noticed aspects of the Nexperia story, at least from the point of non Dutch players, there is a Dutch phenomenon, the ‘poldermodel', which can be said to be closely connected to ‘tripartism' as a concept in general.

Under this model, government, employers, and workers negotiate with each other and find a way by compromising. Dutch ministries by and large operated in their own way and they usually took on representation for their area in government on the basis of the consensus reached by them with the relevant stakeholders. Nevertheless, this kind of working relationship is only possible if all the participants engage seriously in tripartite process. If a company wants government support, then it will need to do so in good faith with all the players involved.

At the core of what the Economic Affairs Ministry and Nexperia talked about during their meetings was this kind of cooperation. From a reports standpoint, Wingtech decided not to extend the collective industrial relations agreement that Nexperia had signed with trade unions indicating to it that Wingtech hadn't grasped the ‘voluntary' nature of the process very well. On the other hand, a number of reports depicted Dutch ministry as a serious player who was somewhat naively trying to set a direction that would allow handling Nexperia like a European company.

In contrast to the previous point, reports show a very different impression of Zhang's attitude by portraying him as a person who pays no attention to European institutional differences, if any.

A few weeks before, the economic department might have thought that the Nexperia case is going to repeat a similar pattern as the Ampleon one. The support, by the economic ministry, of the Ampleon CEO after he had secretly approached the Enterprise Chamber, was just one of the few cases involving a former subsidiary of Philips Semiconductor that a Chinese investor had become the owner of. Similarly, one of the main factors was the Chinese parent company’s contemplation to move the research capabilities to Shanghai. In both instances, one of the agreements signed in the Ampleon case in 2025, in addition to maintaining Chinese ownership, was to implement measures against intellectual property leakage. However, the matter was not disclosed to the outside world until FD newspaper exposed it in April 2026.

In addition to the ministerial involvement and the lack of an American part in the case, the Nexperia case was unique also because of the presence of Zhang Xuezheng.

Coercion by China in Manufacturing – Indirect

The weakening that affected Nexperia was the result of China’s decentralized industrial policy whereas the economic pressure caused by Netherlands intervention was the work of a central government. European people have failed to grasp the main points of the Dutch system, yet the Dutch reaction showed that even The Hague does not have a comprehensive understanding of how the Chinese industrial landscape operates.

People like Zhang Xuezheng are not rare examples of entrepreneurs in China. In fact, government policy is set in a way that entrepreneurs like Zhang are able to realize big plans. The Chinese Party State sets priorities in industry, but leaves execution mostly to the local government, which Europeans often fail to understand. Beijing encourages entrepreneurs like Zhang and local governments to serve the goals of the State by creating proper incentive systems. In some areas strategically important, such as developing alternatives to ASML, the government plays a central role while most of the rest of the activities, from electric vehicles to other semi-conducting works, are led by initiatives of a public-private nature at the local level. “The Nexperia Dispute: Lessons for Europe’s

Reports from the media in the Netherlands and a file of court documents imply that after being acquired, Nexperia became a platform which allowed Zhang to fulfill his broader visions of establishing his business in China. His personal interests meshed with local authorities' incentives to help industrial goals of China through, for example, development of Zhang's own WSS fab. The decline of Nexperia's operations outside China was a direct result of that concentration of efforts on China and the consequent neglect of other areas. In the eyes of Beijing, such results come out naturally from the system even though there can also be particular ​‍​‌‍​‍‌exceptions.

The​‍​‌‍​‍‌ governing discussions on the Economic Affairs Side and Nexperia were based around the issue of European company status. Wingtech’s decision not to extend the collective bargaining agreement of Nexperia with trade unions indicated that it had failed completely to grasp the“

‚Voluntary’ aspect of the process. In reports, the Dutch ministry has been presented as a sincere effort, a possible naiveness, to create a road that would see Nexperia treated as a European company. On the other hand, Chinese investor Mr. Zhang seemed totally indifferent to such European institutional nuances. “The Nexperia Dispute: Lessons for Europe’s

The Dutch Ministry may have hoped for the Nexperia negotiations to be similar to a previous case where in 2024 the government was backing the CEO of Ampleon, another ex-Philips Semiconductor company belonging to a Chinese shareholder, when he stealthily went for the same Enterprise Chamber. The conditions were the same in that case: The Chinese owner has been contemplating relocating R&D functions to Shanghai. That case resulted finally in a 2025 agreement which was keeping Chinese ownership while imposing IP confidentiality restrictions. It was only in April 2026 when the newspaper FD came out with the story which revealed the event that it remained a secret.

The difference aside from ministerial intervention and the lack of a U.S. part was that at Nexperia, Zhang Xuezheng had been one of a few important decision-makers.

Decentralized Industrial Coercion of China

There is hardly any other place in the world that would have allowed the kind of industrial policy as the Chinese government did at that time. The economic pressure following The Hague's intervention was centralized though. The Dutch had misestimated several aspects of the Chinese way of government; at the same time, the actions The Hague took indicated that in the Netherlands, some influential people failed to grasp fully how China's industry functions. “The Nexperia Dispute: Lessons for Europe’s

Businesspersons like Zhang Xuezheng are quite common in China. In fact, the state provides an environment for business people to realize their ambitions. It is the Chinese communist party, which sets industrial priorities at the national level, subsequently depending on the local authorities to implement these policies. This mode of operation, however, is not the only thing that Europeans misunderstand. It is the Chinese central government that provides incentives which stimulate entrepreneurs like Zhang to do the local governments for the country as a whole. “The Nexperia Dispute: Lessons for Europe’s

Some of the major initiatives, such as creating substitutes for ASML, are centrally managed. On the other hand, most of the remaining areas – including electric cars and relatively minor semiconductor-related industries – are mainly the outcome of public-private local projects initiated.

Dutch media reports and court documents have pointed out that Nexperia was merely a tool for Zhang to realize his dreams of becoming a technology mogul in China. His personal desires perfectly matched the motivations of Chinese officials that led them into helping local industry through supporting Zhang’s independent WSS fab. The decline in quality of the non-Chinese operations at Nexperia was a natural result of the focus on China. To the Chinese leaders, such consequences happen at the system level and do not always require the central government to intervene in individual cases.

The somewhat crude response of the Dutch Ministry of Economic Affairs soon turned this purely local issue into a political conflict which brought the Chinese leaders face to face. Ministry intervention and court decision merged as a result of the poor communication in The Hague, limited understanding of the Dutch system by the Chinese side, and the purposeful way in which Beijing portrayed events. However, once Chinese officials saw that the Dutch decisions constituted a public challenge to China, they hardly had another option but to reply ​‍​‌‍​‍‌openly.

With​‍​‌‍​‍‌ regard to the technology rivalry between the U.S. and China, and as the Netherlands continues to support ASML through Washington, China could easily depict the situation as a U.S.-sponsored move to stop China's development of technology. Additionally, Beijing had a strong desire for other European countries not to enact such measures of economic security by setting out the Dutch case as an early warning. “The Nexperia Dispute: Lessons for Europe’s

Due to a rise in nationalism, the situation was easier to ignite the public anger at home. Although most importantly, it seems that the core technology used in Nexperia actually come from Europe, Chinese propaganda presented China's半导体 development as the case of Netherlands interference.

After that, Beijing acted according to its well-established script. China, on October 4, introduced export limitations that instantly brought economic pressure to bear by relying on its growing supply chains as sources of power and urging the other side to re-enter negotiations.

The Chinese side also tried to go around The Hague's jurisdiction by asking Nexpecia to directly conduct negotiations with Wingtech and Beijing, while at the same time, they were applying diplomatic, economic pressure through Berlin and Brussels, and the worried German automakers. China portrayed the situation through the entire dispute as merely a business conflict which the Dutch government wrongfully escalated to a political fight. “The Nexperia Dispute: Lessons for Europe’s

When a corporate party has a deep integration with Chinese decentralized industrial policies the Dutch stakeholder model is quite a challenge. Zhang seemed to have no intention to follow the rules of the Dutch way, did not comply with their procedures and obviously did not see the need in compliance. One question is whether he could have complied even if his attitude was one of non-compliance as well. “The Nexperia Dispute: Lessons for Europe’s

There were, no doubt, very good reasons for Beijing to act when the matter became a highly political fight. The desire to stop other governments from undertaking similar actions and the need to protect Nexperia which is an element of a Chinese industrial plan both pointed to the lack of possibility to back out. Hence, the fact that in China Nexperia lost most of its operations at an early stage was a foregone conclusion.

Erosion in Europe’s grasp of Beijing’s economic techniques continued to be exposed, when the Dutch ministry, an inexperienced politician, who was going to participate in the national elections stated in the Parliament that their ministry did not foresee that China would respond to exporting controls on Nexperia’s Chinese assembly facilities because such controls are usually connected with non-proliferation measures. Still, the interruption of customs activities is, in most cases, the starting point in case of major disputes. Moreover, we also have to consider whether the intervention was a necessity or just an unnecessary further politicization of the case.

In any case, trying to prevent Nexperia’s sale was understandable. The chance that Nexperia might otherwise have lost everything was big. The effect China's export limitations on Nexperia’s Chinese factories had on the worldwide auto industry was a good example of what ongoing inactivity likely would have ​‍​‌‍​‍‌meant.

At​‍​‌‍​‍‌ least in the digital sector, the fact is that businesses need to keep updating their tools and strategies if they are not willing to fall behind in a rather short time. A good content strategy enables a brand to get the attention of the intended audience in a meaningful and personalized way. A great example of that is Nexperia being transparent in its case against Wingtech and using this opportunity to highlight the problem of confidentiality breaches which can have serious side effects when it comes to the competitiveness of a company. On the flip side, it is quite common for companies to have internal conflicts in their customer relations department.

Apart from that, the changes also reflected on the Chinese side of the escalation. As Wingtech publicly filed in China, Nexperia could no longer follow Ampleon’s CEO’s discreet approach.

In addition, since the regulations the mainland Chinese government issued have included references to the Nexperia affair, it is quite safe to assume an Ampleon-style arrangement will be unlikely to happen again in the future.

Moreso, the settlement itself is very significant because it means the parties agree that the incurred expenses will be bearable. Next, Nexperia is enlarging their operation in Malaysia. Wingtech, the not so experienced and small in scale Chinese owner, suffered setbacks, has major financial problems, and may still be at risk to disappear from the Shanghai stock exchange.

The division of Nexperia into separate European and Chinese businesses undoubtedly is a high-price paid strategy, but the survival of a European subsidiary was the main reason for this move.

In a Handelsblatt interview, the temporary CEO said the biggest shortage challenges for European customers should fade by the end of 2026 due to the surge of the assembly capacity in Southeast Asia. Losing the segment of Nexperia that is becoming a standalone Chinese business may seem like a defeat, but a painful result of this kind was very hard to prevent.

The deeper problem is that Nexperia as a company will become weaker in case Europe does not protect its more general economic security. The remaining part of the business might become customer-free. Similar developments can be observed in cases where Chinese investors have taken over other European companies. Getting Europe right for once – after it was quite expensive for Europe not prioritizing its economic security for a long time – will be made of new difficult episodes. At least two things, however, will have to be included in that package: one is crafting policies that fit the political, cultural, and legal environment of each nation. Then is getting ready to pay the price of employing ​‍​‌‍​‍‌them.