The global semiconductor industry is facing a complex and controversial dispute, with China and the Netherlands at the center of a heated diplomatic exchange. This issue has the potential to disrupt the entire supply chain and spark a new trade war.
The Battle for Nexperia: A Microcosm of Geopolitical Tensions
Beijing is not happy with the Dutch government's actions regarding Nexperia, a Dutch chipmaker with Chinese ownership. China believes the Dutch side is obstructing Wingtech Technology's efforts to regain control of Nexperia, which could have severe implications for the global semiconductor industry.
A Chinese Ministry of Commerce spokesperson criticized the Dutch government for its lack of cooperation, urging them to correct their 'wrongdoing' and restore stability to the supply chain. The spokesperson highlighted the Dutch side's 'improper' intervention in Nexperia's affairs, which triggered a global crisis.
But here's where it gets controversial: the Dutch Economic Affairs Minister, Vincent Karremans, defended the government's actions, stating that intervention was necessary. This stance contrasts sharply with the previous emphasis on cooperation between Beijing and The Hague.
The dispute escalated in September 2025 when the United States expanded its Entity List rules, automatically covering companies majority-owned by sanctioned firms. In response, the Dutch government temporarily took control of Nexperia, citing governance concerns. A Dutch court then suspended Nexperia's CEO and appointed an interim head.
China's initial reaction was to restrict exports of Nexperia's China-made chips, but the government soon shifted its strategy, opting for a legal approach. They sent a notice of dispute to the Dutch government, accusing them of violating a 2001 investment agreement between the two countries.
And this is the part most people miss: China's move to resume chip shipments ahead of a meeting between US President Trump and Chinese President Xi Jinping. Trump agreed to delay Washington's new 'penetrating sanction rules' by a year, and the Netherlands halted its intervention.
However, the situation took an unexpected turn when Nexperia China announced plans to invest over $300 million in a new factory in Malaysia, aiming to shift most of its production capacity out of China by mid-2026. A Hainan-based columnist believes this is a clear indication of the Dutch and US governments' intentions to strip China out of Nexperia's supply chain for mature chips and replace it with Malaysia.
The columnist suspects that Nexperia's Dutch executives had long planned this move, seeking a court mandate to secure control and suspend the CEO. They argue that even if Wingtech regains control, the Malaysian supply chain will already be established.
Wingtech now faces a difficult choice: either accept the gradual shift of production to Malaysia, or cut off overseas shipments, stop recognizing Nexperia's Dutch intellectual property, and focus on domestic foundry capacity. Some observers warn that the latter option could violate the Xi-Trump understanding and trigger a new tariff war.
Beijing has so far avoided this double-loss outcome, with Wingtech's Chairman Yang Mu stating that Nexperia China's factory in Dongguan has resumed chip shipments and delivered over 11 billion chips to clients globally. Yang accused Nexperia of pressuring suppliers to avoid working with its China operations and cutting off wafer supplies.
Wingtech may pursue international arbitration if the issue remains unresolved within six months, with potential claims reaching up to $8 billion. This includes the acquisition cost, asset appreciation, and future earnings potential. The commentator warns that if the Netherlands refuses to pay, Chinese law could allow for the reciprocal seizure of Dutch assets in China, and China could also tighten regulations on Dutch companies or restrict exports of critical materials.
In conclusion, this dispute highlights the delicate balance of power and interests in the global semiconductor industry. With potential ramifications for the entire supply chain, the outcome of this battle for control of Nexperia could shape the future of international trade and relations.
