The Dutch government suddenly announced on November 19 to suspend its regulation on Nexperia Semiconductor, a chip manufacturer headquartered in the Netherlands but acquired by a Chinese company. Previously, the Netherlands had frozen its global operations citing “national security” concerns. After two months of back-and-forth, the situation has taken a turn, but the underlying conflicts remain unresolved.
The issue dates back to the end of September when the Dutch Ministry of Economic Affairs suddenly ordered a freeze on Nexperia’s global operations and halted the Chinese CEO’s position through the courts. This decision came swiftly, and the Chinese side quickly retaliated by banning this Dutch company from exporting products from China. The problem arose because 80% of Nexperia’s products need to undergo final packaging and testing in China before being sold worldwide, and this ban directly cut off its main sales channel.
In October, the situation escalated further when the Chinese Ministry of Commerce announced strict controls on rare earth exports. Rare earths are critical materials for chip manufacturing, and Dutch companies producing lithography machines were alarmed; without Chinese rare earths, they couldn’t even produce their equipment. This led to a 60% reduction in global chip supply, leaving many automotive companies without stock.
Interestingly, why did the Netherlands suddenly take such a hard stance? Later documents revealed significant pressure from the United States. The U.S. previously had a “penetration rule” requiring countries to monitor foreign companies controlled by Chinese enterprises, with potential sanctions for non-compliance. After discussions between the Netherlands and the U.S., the focus turned to Nexperia’s Chinese background.
However, the Netherlands is now feeling the strain. Limiting Nexperia not only affects Chinese companies but also causes unrest among European and American customers buying chips, as the supply chain is severely constrained. Therefore, the Netherlands hastily announced the suspension of the administrative order to allow room for negotiations between both parties. However, the Chinese Ministry of Foreign Affairs had previously stated its firm opposition to the Netherlands’ “overreaction,” essentially accusing it of undermining market rules.
Looking back at Nexperia’s situation, it is indeed quite awkward. Registered in the Netherlands, with its largest shareholder being a Chinese company, its factories in China, and customers worldwide, the Netherlands wants to regulate it, but most of its production capacity is in China, which could backfire and harm global automotive companies. China’s countermeasures on rare earths and export bans strike at the opponent’s soft underbelly.
The situation is currently temporarily eased, but the problem remains unresolved. The Dutch administrative order is only suspended, not completely canceled. If the U.S.-China tensions in the semiconductor field continue to escalate, hostilities could reignite at any time. Companies caught in the middle are in the most difficult position, needing to comply with the laws of their registered country while relying on supplies from the country where their production base is located.
The U.S. is still pushing the “penetration rule,” pressuring other countries to take sides. If the Netherlands truly takes further actions to appease the U.S., the chip crisis will only worsen. Automotive companies can only pray that all parties do not escalate the situation too much; otherwise, the losses from production stoppages due to chip shortages will be unbearable for anyone.