European country claims highly exceptional law invoked to protect economic security

The Dutch government has seized control of Chinese-owned chipmaker Nexperia, invoking an emergency Cold-War era law in a move that is likely to heighten trade tensions with Beijing.

It claimed that the "highly exceptional" decision to invoke the Goods Availability Act was necessitated by "serious governance shortcomings" at the semiconductor manufacturer, owned by Wingtech Technology of China and headquartered in Nijmegen.

The move was also meant to ensure the European supply of semiconductors remained uninterrupted and to protect European economic security, the Dutch government said in a statement.

"We strongly protest against the discriminatory treatment targeting Chinese firms," Wingtech responded in a statement posted on Chinese social media site WeChat on Monday. The company said it was pursuing diplomatic and legal measures to address the situation and called on the Dutch government to withdraw the decision.

The decision, announced on Sunday, came a day after the US dramatically expanded sanctions on Chinese companies and Beijing retaliated by tightening export controls on rare earth materials.

The Dutch decision threatens to further escalate the West's trade tensions with the Asian economic giant.

The Goods Availability Act, passed over 70 years ago, empowers the government to intervene in private companies to maintain access to critical products in exceptional circumstances, which include threats to economic security.

The Dutch government claimed that "only due to the significant scale and urgency of the governance deficiencies at Nexperia has the decision been made to apply the Act".

"This is a measure the government uses only when absolutely necessary," it said.

"Application of this Act in this case is solely intended to prevent governance shortcomings at the specific company concerned and is not directed at other companies, the sector, or other countries."

Nexperia is a major supplier of essential parts used in cars, smartphones and industrial equipment.

Shares of Wingtech, Nexperia's Shanghai-listed parent company, dropped 10 per cent on Monday morning.

In December 2024, the US government placed Wingtech on its "entity list", identifying the company as a national security concern. This barred US companies from exporting goods manufactured in America to businesses affiliated with the Chinese firm without a special approval.

In the UK, Nexperia was forced to sell its silicon chip plant in Newport after ministers and MPs expressed national security concerns. The company still operates a facility in Stockport.

The China Semiconductor Industry Association said on Tuesday it was "seriously concerned" about the Dutch government's decision to seize control of Nexperia.

It called the decision "selective and discriminatory" towards overseas subsidiaries of Chinese companies, saying it undermined the principles of open trade.

The Chinese foreign ministry too denounced the Dutch move. "China always opposes overstretching the concept of national security and discriminatory moves that target companies from certain countries," ministry spokesman Lin Jian told a press briefing on Monday. "China is firmly resolved in defending its own legitimate and lawful rights and interests."

While Nexperia is allowed to maintain normal production, the Dutch government now enjoys the authority to block or overturn its decisions.

Wingtech said it had been ordered to stop any changes to Nexperia assets, operations, or personnel for up to a year. "Nexperia complies with all existing laws and regulations, export controls and sanctions regimes," the company said in a statement on Monday.

Netherlands seizes control of Chinese-owned chipmaker Nexperia under Cold War-era law