China, Netherlands chip dispute signals new crisis in global chip supply

By Emre Aytekin and Emir Yildirim

BEIJING (AA) — The Netherlands seized the chipmaker Nexperia, owned by Chinese firm Wingtech, over management issues and national security, a move that is expected to bring a widespread supply chain crisis to the fore, which may affect the auto production industry the most.

The US-China chip war led to the seizure of the Chinese-owned European chipmaker, signaling that geopolitical competition directly affects industry and supply chains.

Nexperia supplies chips to all leading European, American, and Japanese carmakers. The disruptions in its supply chain could leave the auto industry in a crisis similar to the pandemic-induced chip shortage.

US President Donald Trump and Chinese President Xi Jinping reached a temporary deal on chips during a meeting in South Korea on Oct. 30, but the ongoing tension between Beijing and Amsterdam keeps the possibility of a global chip supply crisis on the table.

The Netherlands said it seized the management of Dutch-based Nexperia on Oct. 1. Chinese firm Wingtech had acquired a majority stake in the firm in 2019, which meant that it controlled the chipmaker.

Nexperia’s Chinese CEO, Zhang Xuezheng, was also replaced by the Netherlands due to some serious management issues, which allegedly threatened the continuity of key tech expertise and production capacity in the country and in Europe.

Dutch Economy Minister Vincent Karremans said the decision was made out of concern that such critical tech and capabilities may leave Europe.

The Netherlands’ move came after the US decided to extend its export control measures.

The Amsterdam Court of Appeal said on Oct. 14 that a delegation from Washington warned Dutch government representatives during a meeting on June 12 that Nexperia would be added to the US’ Entity List starting Oct. 1 if its Chinese chief isn’t removed.

Wingtech was among the Chinese firms added to the Entity List in December 2024 during the Biden administration. Under Biden, the US focused on preventing the transfer of key technologies that could threaten its national security as a part of its strategy to compete with China.

Meanwhile, China responded to the Netherlands’ move by controlling the export of chips made by Nexperia in China. The firm’s Chinese unit informed its customers on Oct. 17 that the firm’s European headquarters had cut off access to the systems of its Chinese employees and suspended wages, which prompted the Chinese unit to establish a local supply chain.

Despite Trump and Xi’s agreement in South Korea to postpone implementing the 50% ownership rule for companies added to the Entity List for a year, this did not stop or resolve the China–Netherlands issue.

Beijing says the Dutch government is responsible for the emerging global supply crisis, saying it ignored even the most reasonable demands over Nexperia. The Netherlands currently appears to have not been convinced by a solution unless management issues that it deems to threaten national security are resolved.

The Chinese Commerce Ministry said Chinese exporters’ license applications were responded to quickly and the necessary support was provided to ensure that the chipmaker’s Chinese unit can continue supplying chips.

These developments led to a private firm like Nexperia being split into separate units controlled by two different governments. The situation points to how vulnerable industries and supply chains are to political intervention fueled by geopolitical competition.