Nexperia Case Offers Lessons for Europe's Economic Security

Read The Diplomat, Know The Asia-Pacific A combination of media misunderstandings, Chinese distortions, and Dutch mistakes raise the risk that Europeans draw the wrong conclusions about economic security. The July 2026 meeting between Dutch Trade Minister Sjoerd Sjoerdsma and China’s Commerce Minister Wang Wentao was cordial. That might have come as a surprise given the tensions that erupted between China and the Netherlands following a high-profile dispute about Nexperia in the fall of 2025. The new Dutch government made it clear that it wanted to patch up ties with Beijing. Underneath the mess, the Nexperia incident was actually a comparatively successful economic security intervention – and that carries important lessons for Europe. At the July 2026 talks, the Chinese side called on the Dutch to “promote the proper resolution of disputes involving relevant companies,” a clear reference to the Nexperia case. Meanwhile The Hague is keen to let the courts move ahead. Nexperia’s Chinese owner, Wingtech, claims Nexperia China is now an independent producer, while Nexperia expects the worst shortages on the European side to ease by year’s end. China’s position of power means that a split of the company appears unavoidable, but at least its European business was saved. There remain many uncertain factors, not the least Wingtech’s arbitration procedure against the Dutch state incorrectly claiming expropriation while a court case that could permanently replace management is underway. Yet, a combination of not all Anglophone press fully grasping what really happened, Chinese distortion of the facts, and some Dutch ministerial amateurism raise the risk that Europeans draw the wrong conclusions about a vital policy area. Acting on the back-foot in response to a clear threat to European economic security, the Dutch economic affairs minister and Nexperia’s European leadership faced Beijing’s usual recipe of escalating to force the other to de-escalate when they moved to protect the automotive chip manufacturer. The minister’s moves should have been planned better, yet it was necessary to finally call a halt to the company’s hollowing out by its Chinese owners. If European countries want to avoid high long-term costs, they not only need to face the disproportionate short-term costs that Beijing will seek to inflict but also accept that any wins will only ever be partial. The Longer Timeline The story of Nexperia is one of several interventions that lacked sufficient force to change the overall trajectory. Things only came to a head when the remaining choice was between biting the bullet and losing everything. The company’s importance to supply chains was not fully appreciated when it was created out of the low-margin Standard Products unit of NXP Semiconductors – itself carved out of Philips in 2006. In 2017, this new Nexperia was sold to Chinese state-backed funds JAC Capital and Wise Road. The next year, the two funds organized a closed-door auction of the company only open to Chinese bidders. The winner was Wingtech, a small company with no serious experience in the field. These sales were little remarked on in the years before the EU enacted its FDI screening. At the time, Chinese investment was welcome. In fact, two other Philips Semiconductor components also moved to Chinese ownership: chip designer Goodix and Ampleon. Despite promises to prevent leakage at the time of takeover, former CEO Frans Scheper told Dutch television that it was clear Wingtech’s Zhang Xuezheng tried to turn Nexperia into a Chinese company from the beginning. Nexperia’s European directors were largely unaware of Zhang’s checkered record in China, where he had been sentenced to prison in 2005 for unlawfully obtaining ZTE trade secrets and fined in 2024 for concealing shareholdings back in 2017. The Dutch civilian intelligence agency AIVD was asking questions about Zhang in 2019, but nothing came of it. The first sign of external trouble stemming from Chinese ownership came a few years later. In November 2022, the U.K. government forced Nexperia to reverse the acquisition of a fab in Newport. The company started talks with the Dutch Economic Affairs Ministry about governance reforms that would allow it to be treated like a European company, after it missed out on German chip funds in 2023. Nexperia’s customers pressured it to address concerns and diversify. When Wingtech was put on the Entity List by the U.S. government in December 2024, engagement with the ministry intensified. Rather than solving the problems, those typically Dutch talks ended up triggering the Chinese management. As time wore on, the Europeans began to believe that Zhang was acting in bad faith in multiple ways. In China, he had been setting up parallel structures with his WingSkySemi (WSS) fab in Shanghai under his own Wentianxia holding. The Chinese owners stopped the incomplete expansion of its Malaysian assembly center, despite customer demand. Zhang was focused on China, where his true interests lie. When the talks between Nexperia and the Dutch government honed in on governance changes, the Chinese owners began to fear they would lose control. A Chinese legal firm was brought in to advise. Matters came to a head when Wingtech allegedly violated Dutch company law to remove European directors and give unqualified Chinese officers financial control. This is when the interventions happened. Both the Dutch ministry and Nexperia’s European managers told the court there were imminent plans to move R&D and production to China. Zhang supposedly drew up a plan using DeepSeek and ChatGPT that would have entailed laying off almost half the European staff. The court filings accuse Zhang of placing an unnecessarily large order of $200 million from his own WSS fab in Shanghai. Talks were no longer enough to resolve this chasm in understanding. The Dutch Polder Model Now the dust has settled, all that remains of the interventions is the Dutch court order. All attention has been drawn to Dutch and U.S. government actions; however, the real effects stemmed from the specific nature of the Dutch system. That legal route is precisely why The Hague cannot be forced by Beijing to reverse what has happened. The world learned about the Enterprise Chamber of the Amsterdam Court of Appeals – the court responsible for corporate matters – in October 2024. Nexperia’s chief legal officer had turned to the court accusing Zhang of mismanagement, joined by the workers’ council. The Dutch Ministry of Economic Affairs had been aware beforehand and moved first. Afraid that Zhang would act to forestall the case by firing the directors, Vincent Karremans – then the minister of economic affairs – issued an unprecedented instruction under never-used Cold War legislation to put the company under special supervision. The next day, on October 1, the Amsterdam court issued its first of several provisional rulings that suspended the Chinese owners’ pow