Dutch Court Mandates Formal Investigation into Nexperia Amid CEO Suspension
A Dutch court has mandated a formal investigation into semiconductor chipmaker Nexperia, while simultaneously upholding the suspension of its Chinese CEO. The ruling, delivered by the Enterprise Chamber of the Amsterdam Court of Appeal, cites significant doubts regarding the company's policies and conduct, marking the latest development in a saga that has reverberated through global auto manufacturing sectors.
Escalating Dispute and National Security Concerns
The dispute gained international attention in October when the Dutch government assumed control of Nexperia, citing pressing national security concerns. This intervention followed the suspension of Nexperia's Chinese CEO, Zhang Xuezheng, who also founded Wingtech, the company's owner. Allegations of mismanagement prompted this initial suspension, setting the stage for further legal scrutiny.
During a recent court hearing, legal representatives for Zhang and Wingtech portrayed him as a capable entrepreneur navigating complex geopolitical challenges. They argued against the necessity of an investigation, asserting that Wingtech was caught off guard by the Dutch government's decisive actions. Notably, Zhang was absent from these proceedings.
Court Findings and Conflict of Interest Allegations
Contrasting this defense, Nexperia's lawyer, Jeroen van der Schriek, informed the three-judge panel that Wingtech and its Hong Kong-based holding company, Yuching, have demonstrated a willingness to prioritize other interests over Nexperia's welfare since October. The court's official statement elaborated on these concerns, highlighting that a conflict of interest had been managed without due diligence.
The statement further indicated that there are clear signs the director of Nexperia altered the company's strategy without proper internal consultation, potentially under the threat of impending sanctions. Additionally, agreements with the Dutch Ministry of Economic Affairs were reportedly disregarded, the authority of European managers was curtailed, and their dismissals were announced prematurely.
Investigation Timeline and Global Supply Chain Impact
The court acknowledged that the investigation's duration remains uncertain but noted such probes can extend beyond six months. The findings will be crucial in determining whether mismanagement occurred at Nexperia and what definitive measures may be required. Nexperia has not yet responded to requests for comment regarding this development.
The conflict intensified in October when China temporarily halted exports of Nexperia chips from its domestic plant, causing widespread disruption among global auto manufacturers. Companies scrambled to secure alternative supplies, leading to production halts for brands like Honda and supply chain challenges for others, including Mercedes-Benz. Although Beijing lifted the export ban following diplomatic discussions between U.S. President Donald Trump and Chinese leader Xi Jinping, tensions persisted.
Ongoing Internal Strife and Historical Context
A standoff between Nexperia's Netherlands headquarters and its Chinese unit continued to exacerbate chip supply chain anxieties. The Chinese arm accused the Dutch headquarters of disrupting wafer shipments, thereby hampering core production and final product deliveries. In retaliation, the headquarters claimed the Chinese unit ignored direct instructions from the main office.
The court emphasized that Nexperia's current predicament necessitates a period of stability to mend internal relations, restore its production chain, and ensure reliable deliveries to customers. This situation underscores the broader vulnerabilities in global semiconductor supply chains.
Nexperia, originally spun off from Philips Semiconductors two decades ago, was acquired by Wingtech in 2018. The company's expansion efforts faced further obstacles in 2023 when the British government blocked its attempt to acquire Wales-based Newport Wafer Fab, citing national security risks. This series of events highlights the intricate interplay between corporate governance, international trade, and geopolitical tensions in the high-stakes semiconductor industry.
