Dutch minister seeks to resolve Nexperia dispute with China amid export control standoff

Dutch Minister of Economic Affairs Vincent Karremans has held telephone discussions with Chinese Commerce Minister Wang Wentao aimed at resolving tensions over semiconductor manufacturer Nexperia that have rattled the automobile industry worldwide, according to statements by both governments. 

The Dutch government took control of Nexperia on 30 September, prompting Beijing to prohibit exports of finished products from the chipmaker’s Chinese operations. Nexperia is owned by China’s Wingtech and supplies essential semiconductors used in everything from lights to vehicle electronic control units.

‘This afternoon, I spoke with the Chinese Minister of Commerce, His Excellency Wang Wentao,’ Karremans said following the call. ‘We discussed further steps toward reaching a solution that serves the interests of Nexperia, the European economy, and the Chinese economy. In the coming period, we will remain in contact with the Chinese authorities to work toward a constructive solution.’

The telephone conversation came at the request of the Dutch minister, according to the Chinese Ministry of Commerce, which issued its own statement on the call.

Wang told his Dutch counterpart that China ‘attaches great importance to China-Netherlands economic and trade cooperation’, but warned that Dutch measures against Nexperia ‘have seriously impacted the stability of the global supply chain’.

‘China urges the Netherlands to proceed from the overall interests of maintaining the security and stability of the global supply chain, uphold the spirit of contract and market-oriented and rule-of-law principles, and promptly and properly resolve the issue,’ Wang stated, calling on the Netherlands to ‘protect the legitimate rights and interests of Chinese investors, and create a fair, transparent, and predictable business environment’.

The diplomatic outreach follows the Dutch government’s unprecedented seizure of control over Nexperia using the rarely invoked Goods Availability Act, citing concerns that the company’s Chinese-born CEO Zhang Xuezheng was attempting to relocate operations and assets abroad.

In a television interview with Dutch TV programme Buitenhof on Monday, Karremans elaborated on the sequence of events leading to the government intervention, stating that Zhang ‘was secretly trying behind our backs to move the operation abroad, effectively emptying the company here. If he had succeeded, the last knowledge and capability we still had in Europe for this kind of chip production would have disappeared, leaving us very vulnerable’.

Karremans acknowledged that Chinese authorities suspect coordination between the Netherlands and the United States, following the US Bureau of Industry and Security’s decision to place Nexperia on its export control Entity List on the same day as the Dutch intervention.

‘Of course they suspect that we’re colluding with the Americans, which is not the case,’ Karremans said. ‘That’s why we immediately intensified diplomatic engagement to explain that.’

He explained he had made the preliminary decision to intervene several days before learning that US authorities would add Nexperia to their blacklist on the same weekend.

‘We wondered whether this was a coincidence, but the explanation we received was that, due to the impending US government shutdown, they wanted to finalise the listing beforehand, to be safe,’ Karremans said. ‘So yes, both actions happened on the same day, but it really was a coincidence.’

China responded to the Dutch takeover by imposing export controls on 4 October, preventing Nexperia’s Chinese operations from exporting certain finished components and sub-assemblies manufactured in China.

Karremans stressed that the Dutch action ‘was a measure aimed at a company, not a country’, and said European partners understand the rationale for the intervention.

‘If I hadn’t acted, and if that CEO had succeeded in relocating everything out of Europe, then Europe would now be 100% dependent on foreign countries for this kind of chip production and know-how,’ the minister said. ‘That would be extremely vulnerable, especially in crises.’

In a 14 October notice on its website, Nexperia said it ‘has made sufficient preparations to ensure business continuity’, adding it is ‘confident that a solution will be found’.