The battle for control of Dutch semiconductor firm Nexperia has taken a decisive turn, with a Dutch court ordering a formal investigation into alleged mismanagement and upholding the suspension of its Chinese CEO, Zhang Xuezheng. The ruling, delivered on , prolongs a crisis that has disrupted global automotive supply chains and sparked geopolitical tensions.
The Amsterdam Enterprise Chamber’s decision stems from concerns raised by the Dutch government in , when it temporarily seized control of Nexperia citing national security concerns. The court’s ruling reinforces the transfer of control to a Dutch lawyer, effectively sidelining Wingtech, Nexperia’s Chinese parent company, and placing the company’s operational leadership in the hands of its European team.
At the heart of the dispute lies a breakdown in collaboration between Nexperia’s European and Chinese divisions. The European arm, responsible for wafer production, ceased shipments to the Chinese side for final assembly in October, citing non-payment. This internal conflict has exacerbated existing chip shortages, forcing automotive manufacturers to seek alternative sourcing arrangements, including directly sending wafers to Chinese facilities for packaging.
The court’s investigation will focus on allegations of mismanagement and potential conflicts of interest. Specifically, the judges cited “indications of negligent conduct involving a conflict of interest” related to Zhang Xuezheng’s ownership of a Shanghai-based plant that conducted business with Nexperia. The court also highlighted concerns that Zhang altered the company’s strategy without consulting other board members, particularly in light of potential US sanctions.
The investigation, expected to last approximately six months, will also examine the conduct of Nexperia’s Dutch management, a concession granted to Wingtech. This broader scope suggests the court intends to conduct a comprehensive review of the company’s governance and decision-making processes.
The crisis at Nexperia unfolded against a backdrop of escalating geopolitical tensions. The US placed Wingtech on its “entity list” in late , requiring US companies to obtain licenses for trade. US officials reportedly warned the Dutch government that removing Zhang was necessary to avoid extending these restrictions to Nexperia itself.
During a January hearing, Nexperia’s legal counsel accused Zhang of attempting to relocate equipment to China and utilizing company assets to support Wing Systems, another entity controlled by him. They further alleged that Wingtech actively pressured Nexperia’s business partners to sever ties and even urged the Chinese government to impose export restrictions to harm the company.
Zhang, however, defended his actions, claiming that European management had mismanaged the business and that his efforts to strengthen Chinese production were aimed at building a resilient supply chain capable of withstanding geopolitical shocks. He argued that his actions were in the best interests of the company’s long-term stability.
The court’s decision leaves Nexperia in a precarious position. While the company maintains that its underlying business remains “healthy and resilient,” the ongoing instability poses a significant risk to its operations and its ability to meet customer demand. The ruling prioritizes stabilizing the supply chain and ensuring continued delivery to customers worldwide.
Wingtech expressed its disappointment with the court’s ruling, stating that it “regretted” the decision but remained confident that a full inquiry would demonstrate the appropriateness of its actions. The company criticized the prolonged uncertainty and argued that it had not been presented with sufficient evidence to justify the measures imposed.
The Nexperia saga highlights the growing vulnerability of global supply chains and the increasing intersection of economic and geopolitical considerations. The Dutch government’s intervention, coupled with the US’s actions, underscores the strategic importance of the semiconductor industry and the lengths to which governments are willing to go to secure access to critical technologies. The outcome of the investigation will be closely watched by industry observers and policymakers alike, as it could set a precedent for future interventions in strategically sensitive sectors.
The disruption caused by the internal conflict at Nexperia has already had tangible consequences for the automotive industry, with carmakers facing ongoing chip shortages. Resolving the leadership dispute and restoring stability to the company’s operations is crucial to mitigating further disruptions and ensuring the continued flow of essential components to manufacturers worldwide.
