Court orders investigation into China-owned chipmaker Nexperia

The Dutch government previously announced it had effectively taken control of the firm

A Dutch court has ordered a formal investigation into the semiconductor chipmaker Nexperia, based in the Netherlands, while upholding the suspension of its Chinese chief executive.

The decision by the Enterprise Chamber of the Amsterdam Court of Appeal cited significant doubts regarding the company’s policies and conduct.

This ruling marks the latest development in an ongoing dispute surrounding Nexperia, a company whose chips are crucial for global auto manufacturers.

The controversy gained international attention in October when the Dutch government announced it had effectively taken control of the firm since late September, citing national security concerns.

Nexperia’s Chinese CEO, Zhang Xuezheng, who also founded its owner Wingtech, was initially suspended by the enterprise chamber in October amid allegations of mismanagement.

During a court hearing last month, lawyers representing Mr. Zhang and Wingtech portrayed him as a successful entrepreneur navigating complex geopolitical challenges.

They argued against an investigation, stating that Wingtech had been "blindsided" by the Dutch government’s intervention. Mr. Zhang was not present for the proceedings.

Nexperia lawyer Jeroen van der Schriek told the three-judge panel that the behavior of Wingtech and Hong Kong-based holding company Yuching since October ‘makes it clear that they are willing to subordinate Nexperia’s interests to other interests’ (Associated Press)

However, Nexperia lawyer Jeroen van der Schriek told the three-judge panel that the behavior of Wingtech and Hong Kong-based holding company Yuching since October “makes it clear that they are willing to subordinate Nexperia’s interests to other interests.”

An English statement issued by the court on Wednesday's ruling said that chamber found that “a conflict of interest has been handled without due care” at Nexperia.

It added that there are “indications that the director of Nexperia changed the strategy without internal consultation under the threat of upcoming sanctions.” It said that agreements with the Dutch Ministry of Economic Affairs “were no longer adhered to, the powers of European managers were restricted and their dismissal was announced.”

The court statement said that it could not definitively say how long the investigation would take, but added that such probes can take more than six months. The court will use the findings to assess “whether there has been mismanagement at Nexperia and whether definitive measures need to be taken.”

Nexperia did not immediately respond to an emailed request for comment.

The dispute at Nexperia escalated when China temporarily blocked the export of Nexperia chips from its plant in China in October, sending global auto manufacturers scrambling to secure supplies and alternatives.

Nexperia’s Chinese arm had said its Dutch headquarters interrupted shipments of wafers to its Chinese factory, which it said had impacted its core production operations and weighed on its ability to deliver finished products (REUTERS)

Beijing’s export ban was later lifted, after US President Donald Trump met with Chinese leader Xi Jinping in late October. And the Dutch government in November said it was relinquishing its control of Nexperia as a “show of goodwill.”

But a standoff between Nexperia’s headquarters in the Netherlands and its Chinese unit continued to fuel chip supply chain concerns.

Nexperia’s Chinese arm had said its Dutch headquarters interrupted shipments of wafers to its Chinese factory, which it said had impacted its core production operations and weighed on its ability in delivering finished products. Nexperia’s headquarters hit back, and said the Chinese unit had ignored instructions from the head office.

“Nexperia’s situation now requires, first and foremost, a situation of calm that allows Nexperia to restore its internal relations, its production chain and deliveries to customers,” the court said Wednesday.

Car manufacturers including Honda had to halt production of some cars as the Nexperia crisis unfolded, and Mercedes-Benz was among those scrambling to find alternatives.

Nexperia was spun off from Philips Semiconductors two decades ago and then purchased in 2018 by Wingtech. In 2023, the British government blocked Nexperia’s bid to acquire Wales-based chipmaker Newport Wafer Fab, citing national security risks.