Dutch court hears arguments in Nexperia mismanagement case that upset the global auto industry

Dutch Semiconductor Power Struggle Sends Ripples Through Global Auto Industry

A high-stakes corporate governance battle unfolded in an Amsterdam courtroom Wednesday as lawyers for Nexperia, a Dutch semiconductor manufacturer, squared off against representatives of its Chinese owners in a case that has disrupted global automotive supply chains.

The hearing at the enterprise chamber of the Amsterdam Court of Appeal centered on allegations of mismanagement at Nexperia, with judges considering whether to launch a formal investigation. No immediate decision was announced.

The dispute burst into public view last October when the Dutch government announced it had seized temporary control of Nexperia, citing national security concerns. The move resulted in the replacement of Chinese CEO Zhang Xuezheng, who also founded Wingtech, Nexperia’s parent company. Dutch authorities raised concerns about potential intellectual property transfers and alleged mismanagement under Zhang’s leadership.

Attorneys representing Zhang and Wingtech portrayed him as a successful business leader navigating complex geopolitical waters. They urged the court not to order an investigation and claimed Wingtech had been caught off guard by the Dutch government’s intervention. Zhang did not attend the hearing.

“The behavior of Wingtech and Hong Kong-based holding company Yuching since October makes it clear that they are willing to subordinate Nexperia’s interests to other interests,” argued Nexperia lawyer Jeroen van der Schriek before the three-judge panel.

The corporate conflict quickly escalated beyond the boardroom, triggering a series of retaliatory measures with far-reaching consequences. Beijing temporarily blocked the export of Nexperia chips from its Chinese plant in October, a move that sent shock waves through automotive supply chains worldwide.

Nexperia’s semiconductor components are critical inputs for automakers across North America, Japan, and South Korea. The export ban forced several major manufacturers to scramble for alternative suppliers, with companies like Honda temporarily halting production of certain vehicle models. Mercedes-Benz was among those urgently seeking replacement components.

Tensions eased somewhat after U.S. President Donald Trump and Chinese leader Xi Jinping met in late October, following which Beijing lifted its export ban. The Dutch government subsequently relinquished its control over Nexperia in November as what it described as a “show of goodwill.”

However, internal friction between Nexperia’s Dutch headquarters and its Chinese operations continued to disrupt the supply chain. The Chinese unit alleged that its Dutch parent had interrupted shipments of wafers to its factory, hampering production and delivery capabilities. Nexperia headquarters countered that the Chinese division was disregarding instructions from the head office.

By late December, the dispute had escalated to a diplomatic level, with China’s Ministry of Commerce demanding that the Netherlands “immediately take steps and correct its mistakes,” blaming Dutch actions for causing a global chip supply chain crisis.

The Nexperia case represents one of several recent flashpoints in the increasingly fraught semiconductor industry, where geopolitical tensions and national security concerns are reshaping corporate relationships and supply chains. Originally spun off from Philips Semiconductors approximately 20 years ago, Nexperia was acquired by Wingtech in 2018.

The company has previously encountered regulatory hurdles in its expansion efforts. In 2023, the British government blocked Nexperia’s attempt to acquire Newport Wafer Fab, a chipmaker based in Wales, citing national security risks.

As the Amsterdam court deliberates on the mismanagement claims, industry analysts are closely watching for potential impacts on semiconductor availability for the automotive sector, which continues to face supply challenges amid growing demand for advanced electronics in modern vehicles.