Netherlands cracks down on China-owned chip firm over security risk

The Dutch government said on Sunday that it had taken the “highly exceptional” decision to intervene at Chinese-owned chipmaker Nexperia over a potential “risk to Dutch and European economic security.”

The Netherlands-based firm’s owner Wingtech said on Monday that it will take actions to protect its rights and will seek government support.

The development threatens to raise tensions between the European Union and China, which have increased in recent months over trade and Beijing’s relationship with Russia.

Nexperia was forced to sell its silicon chip plant in Newport, Wales after MPs and ministers expressed national security concerns. It currently owns a UK facility in Stockport.

The Dutch government said its economic affairs ministry had invoked its Goods Availability Act over “acute signals of serious governance shortcomings” within Nexperia.

The law is designed to allow the Hague to intervene in companies under exceptional circumstances. These include threats to the country’s economic security and to ensure the supply of critical goods.

The intervention is meant to prevent a potential situation in which Nexperia’s chips would become unavailable in an emergency, said the Dutch government.

It added that Nexperia’s operations posed a “threat to the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities.”

The company’s production can continue as normal, it added.

Nexperia makes semiconductors used in cars and consumer electronics.

The government statement did not detail why it thought the firm’s operations were risky. The BBC has contacted Dutch authorities for clarification.

Shanghai-listed shares in Nexperia’s parent company Wingtech fell by 10% on Monday morning.

Wingtech is among the firms the US has placed on its so-called “entity list”. Under the regulations, US companies are barred from exporting American-made goods to businesses on the list unless they have special approval.

In September, the US commerce department further tightened its restrictions, adding to the entity list any company that is majority-owned by a Chinese firm.