Nexperia owner was stealing trade secrets, planning to dismantle European branch: report

The Dutch government intervened at Nexperia because Dutch officials believe that the chip manufacturer’s Chinese owner was stealing trade secrets from a British factory and was about to dismantle the company’s European branch, several insiders told NRC. So the Dutch government implemented an obscure law from the 1950s to prevent Europe from losing chip factories and expertise.

Nexperia, headquartered in Nijmegen, makes inexpensive chips used in all kinds of electronics as well as in the automotive industry. The wafers, the round disks on which these chips are made, are produced in Manchester and Hamburg. The chips are then processed by a back-end factory in China.

According to NRC, Zhang Xuezheng, the owner of Nexperia’s Chinese parent company Wingtech, wanted to move all wafer production to China and outsource it to another company he owns, WingSkySemi. To achieve this, he appropriated the chip production recipes from the Nexperia factory in Manchester, UK. This is common technology, but it does involve trade secrets, and Xuezheng did share them with a Chinese competitor, his own company.

Officials at the Ministry of Economic Affairs also told NRC that Xuezheng threatened to lay off 40 percent of Nexperia’s European staff and wanted to close Nexperia’s research center in Munich. His plans for this had already been shared with the works council. Based on these two factors, the Minister decided to intervene.

On September 30, Minister Vincent Karremans of Economic Affairs (VVD) implemented the Availability of Goods Act (1952) and froze Nexperia’s operations. Since then, Wingtech has been unable to relocate any parts or machinery.

One day later, the court also intervened in Nexperia. The Enterprise Chamber of the Court of Appeal suspended the company’s director-owner and placed Nexperia’s shares under independent management. According to the government, it was a coincidence that these two interventions happened so close together.

But the seeming double-attack resulted in China banning the export of Nexperia chips, leading to potential production problems for car manufacturers. Xuezheng accused the Netherlands of acting on behalf of the United States to thwart China - the Netherlands has in the past imposed export restrictions on ASML under pressure from Washington. But the Dutch government insists that the U.S. was not involved in this decision and that the measures target the company’s CEO, not China.

According to Financieele Dagblad, Wingtech is now demanding that the Netherlands return full control and ownership rights over Nexperia to its rightful shareholders in China. Only then can the Dutch government “begin repairing its reputation damage, reducing international tensions, and safeguarding its own and European economic security,” a Dutch spokesperson for Wingtech told the newspaper.