Chip War The Nexperia Case Poses New Risks for the European Electronics Industry

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In the boardrooms of European automotive and electronics companies, concerns are growing that the dispute over Nexperia could lead to shortages. The Chinese government has imposed export restrictions affecting global customers such as Mercedes, VW, BMW, Bosch, Apple, and Tesla.

The company Nexperia, headquartered in Nijmegen, Netherlands, but producing around 80 percent of its semiconductors in the People's Republic of China, is now under pressure from two sides. On October 12, 2025, the Dutch government, in a rather unusual move for peacetime, announced that it would take control of Nexperia, following the U.S. government's expansion of its global export restrictions on Chinese companies like Nexperia the day before.

Economic Security Law Applied

Netherlands Orders Oversight of Nexperia

Nexperia was sold in 2018 by Philips to the Chinese electronics company Wingtech for $3.6 billion. Nexperia CEO Zhang Xuezheng, who has now been targeted by the government in The Hague and suspended in an expedited ruling by a Dutch court, is also the founder of the parent company Wingtech.

The current case—involving US export restrictions on semiconductor equipment and software for Nexperia, as well as Chinese export restrictions on chips produced by Nexperia—is an alarming development for the European industry for several reasons.

Legacy Chips in Focus

The global semiconductor and technology conflict between Washington and Beijing is now expanding for the first time from advanced semiconductors and high-tech equipment like ASML lithography machines to relatively inexpensive, so-called legacy chips. 60 percent of the revenue from Nexperia's semiconductor production in the first half of this year was generated with so-called mainstream chips for the automotive industry. These include power MOSFETs for on-board networks, diodes for control units, transistors, as well as some higher-quality components made from gallium nitride and silicon carbide.

Although these are not advanced high-performance or AI chips, the automotive industry struggles to operate without Nexperia's chips. The company is one of the largest manufacturers of such legacy chips. They are also needed for the production of smartphones, solar panels, and many other electronic products. What happens when such standard components suddenly become scarce is well known to senior executives in the European automotive and consumer goods industries since the supply chain disruptions caused by the COVID-19 measures.

Why the Netherlands' Move?

What exactly led to the intervention in a private company, which even the Dutch government described as "extremely extraordinary," is subject to varying explanations, depending on whom you listen to. The Hague invoked an emergency law from the Cold War era, the "Goods Availability Act," for the removal of the Chinese CEO—a law that had not been used since its enactment in 1952.

The move was based on "recent and acute indications of serious deficiencies in corporate governance and corresponding actions" within the Chinese-led company Nexperia, according to a statement from the Dutch Ministry of Economic Affairs. The ministry invoked this outdated law to place all global assets and personnel decisions of Nexperia under government control on September 30 of this year.

The Hague cited unspecified "indications" suggesting a "threat to the continuity and protection of key technological knowledge and capabilities on Dutch and European soil," according to the statement. It was essentially stated that in the event of a crisis, the supply of such goods to the domestic industry must be ensured.

Knowledge Transfer to China?

According to media reports in China, unsubstantiated allegations were made against the Nexperia CEO, claiming he intended to transfer critical company know-how to China. Some commentators in China describe this as a flimsy pretext by the Europeans, similar to the actions of the Americans in the case of TikTok or the British government in the case of the Newport Wafer Fab (NWF), to force the transfer of Chinese assets into Western hands.

This is, based on current knowledge, neither provable nor refutable. The intervention occurred exactly one day after the U.S. government extended its high-tech export restrictions globally to the subsidiaries of Chinese publicly traded companies. From the Chinese perspective, this is not a mere coincidence but another example of how the Netherlands succumbs to diplomatic pressure from Washington and allows itself to become an instrument of Trump's trade war. "The Dutch Ministry of Economic Affairs is quite obviously following the American government like a tame lamb," Bloomberg quotes a manager from Wingtech as saying.

A Colossal Theft?

After a Dutch court initially acted against Nexperia without any hearing and later required only one day for a ruling against the company, which is still currently under Chinese ownership, following a hearing, the Chinese People's Daily referred to it as a "robbery under the guise of law."

A Chinese government spokesperson spoke of "discriminatory practices," a "politicization of trade policy," and stated that his country is determined to "defend its legitimate rights and interests." This last statement points to the second reason why this dispute is extremely dangerous for the European industry.

Beijing, which has long been frustrated that it can no longer obtain high-end lithography machines from the Dutch monopoly manufacturer ASML due to pressure from Washington, could now resort to retaliatory measures against the entire European semiconductor industry, according to well-informed observers in China. For now, stocks of these MOSFETs and transistors from Nexperia are well-supplied. However, what could happen if China suspends their export even for just a few weeks or months is described by Chinese commentators with memories of the "chaos" during the COVID-19 era, marked by "disrupted delivery schedules" or "factory shutdowns."

If China were to opt for a broader retaliatory measure against Europe and suspend Nexperia exports in the long term, "global industrial production would face a tsunami," warns a commentary on the Chinese news portal Caijing Toutiao. The risk that the U.S.-China chip war, thanks to the overzealousness of the Dutch government, could now fully drag the European industry into its destructive spiral has just become significantly more likely. (sb)