THE HAGUE: The Dutch government took effective control of Chinese-owned chipmaker Nexperia, in what it said was a “highly exceptional” move over worries that corporate governance shortcomings pose a potential risk to European economic security.

In a statement late Sunday, the Dutch ministry of economic affairs said it had invoked the rarely used Goods Availability Act to intervene in the business of Nexperia, which makes semiconductors used in the automotive and consumer technology industries.

Nexperia based in the Dutch city of Nijmegen but owned by China's Wingtech Technology.

Risk to economic security

Concerns about Nexperia’s governance “posed a threat to the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities," the ministry said.

“Losing these capabilities could pose a risk to Dutch and European economic security,” it said, without elaborating.

The government said it wanted to prevent a situation in which Nexperia's chips would “become unavailable in an emergency.”

The government provided few details about its decision to invoke the act on September 30, but the move underscores wider geopolitical tensions between China and the West over the development and mastery of advanced technologies such as computer chips.

Nexperia did not immediately respond to a request for comment.

‘Politicization of commercial matters’

Wingtech said in a social media post that it “firmly opposes the politicization of commercial matters."

Wingtech called the Dutch government's move “an excessive intervention based on geopolitical bias rather than a fact-based risk assessment” that's based on the “unfounded pretext of national security."

Wingtech shares slumped 10% - the daily limit - on the Shanghai Stock Exchange.

Wingtech told the exchange that the decision “temporarily restricts" its control over Nexperia.

The Dutch government said it wanted to prevent a situation in which Nexperia’s chips would “become unavailable in an emergency.”

Nexperia’s “regular production process can continue,” it added.

‘Legal remedies’

The company said it would pursue “legal remedies,” vowed to protect the rights and interests of the company and its shareholders; and is “actively contacting relevant government departments to seek support.”

The Dutch government said its move to exert control means “company decisions may be blocked or reversed by the Minister of Economic Affairs if they are (potentially) harmful to the interests of the company, to its future as a Dutch and European enterprise, and/or to the preservation of this critical value chain for Europe.”

Nexperia was spun off from Phillips Semiconductors two decades ago and then purchased in 2018 by Wingtech.

In 2023, the British government blocked Nexperia's bid to acquire Wales-based chipmaker Newport Wafer Fab, citing national security risks.

Late last year, the US Commerce Department included Wingtech in an expanded list of Chinese technology companies subject to export controls.

‘Risk to our national security’

Commerce Secretary Gina Raimondo said the move was intended to impair China’s ability to use advanced technologies that “pose a risk to our national security.”

China “consistently opposes the overstretching of national security concepts and discriminatory practices targeting companies from specific countries,” Ministry of Foreign Affairs spokesman Lin Jian said Monday when asked about the issue.

“Relevant countries should genuinely uphold market principles and avoid politicizing economic and trade issues.”

The European Union has been in “close contact” with Dutch authorities and will now work with the Netherlands on “next steps” over securing crucial technological capabilities on the continent, European Commission spokesman Olof Gill said.

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Dutch govt takes control of Chinese-owned chipmaker Nexperia