$Wentai Technology (SH600745)$ The birth, past decade, and present of Nexperia Semiconductor.
The Nexperia Group was formerly the standard components division of NXP Semiconductors in the Netherlands.
In 2015, NXP planned to acquire the former Motorola Semiconductor division and global automotive chip giant Freescale for $11.8 billion. This transaction required antitrust reviews from multiple countries, including the Ministry of Commerce of China, the U.S. FTC, the EU EC, and the U.S. CFIUS.
In November of the same year, the Ministry of Commerce of China approved the acquisition with restrictive conditions, stating that the transaction could exclude or restrict competition in the global RF power transistor market. NXP was required to completely divest its RF power transistor business and sell it to Beijing Jian Guang as per the submitted “Samba Agreement”; ensure the continuity, competitiveness, and marketability of the business until the divestiture was completed; provide relevant services to the buyer during the transition period after the closing; and refrain from implementing any equity acquisition of Freescale before the closing.
In June 2016, Beijing Jian Guang Asset Management Co., Ltd. (hereinafter referred to as “Jian Guang Asset”), a subsidiary of China Jianyin Investment, won the bid for $2.882 billion, jointly investing $2.082 billion with domestic and foreign funding partners such as Huarong International, Huarong Investment, Hefei Construction Investment, CITIC Bank, Wentai Fund, Jianyin International, and ICBC International to establish Yu Cheng Holdings. They also took out an $800 million loan from Deutsche Bank to complete the acquisition in February 2017 for $2.882 billion (approximately 19.8 billion RMB), while establishing the Dutch company Ampleon. In 2018, the listed company Aoyede planned to acquire Ampleon (suspected to be related to Ampleon), but the transaction failed due to a complaint from Huarong International to the Securities Regulatory Commission for violating contract terms.
In 2018, the outbreak of the trade war highlighted the weaknesses of China’s chip industry. After the “ZTE chip supply cutoff” incident, chip projects became the focus of capital investment. As a leading company with a complete chip product line, Nexperia Group began to attract close attention from the capital market, especially from listed companies, starting in 2018.
In 2018, Huarong International planned to collaborate with the Hefei municipal government to sell Nexperia Semiconductor to Dongshan Precision. The Industrial and Commercial Bank of China intended to introduce Kuangda Technology as a merger partner, while Huarong aimed to bring in Yinge Investment as a merger partner. In April 2018, the Hefei municipal government organized a market-oriented auction to publicly auction the property shares controlled by Hefei Guangxin. On April 22, 2018, Wentai Technology won the bid, jointly acquiring 4.937 billion property shares of Hefei Guangxin for 11.435 billion RMB, with a premium rate of 131.62%. This transaction valued Nexperia Holdings at 33.67% equity for 11.435 billion RMB, corresponding to a total valuation of 33.973 billion RMB for Nexperia Holdings.
In June 2019, Wentai Technology planned to acquire the equity of Yu Cheng Holdings held by various institutions for 19.925 billion RMB. After the acquisition, Wentai Technology held a total of 74.46% equity in Nexperia Holdings, with a total payment of 26.790 billion RMB for the two acquisitions. Note: When Wentai Technology initiated the acquisition in 2019, it prudently applied for and obtained permission for a national security review from the United States, ensuring compliance was already in place.
Subsequently, Wentai Technology gradually acquired the remaining shares of Yu Cheng Holdings, paying a total of 33 billion RMB to obtain 100% equity of Yu Cheng Holdings (i.e., 100% equity of Nexperia Semiconductor).
The current situation is no longer a simple bilateral friction; it has evolved into a “decisive battle” in the China-Europe supply chain.
The Ministry of Foreign Affairs of China has summoned the Dutch ambassador to China, and the spokesperson of the Ministry of Foreign Affairs has warned the Dutch side in response to media inquiries that “protecting the legitimate rights and interests of Chinese enterprises abroad is unwavering.” The Ministry of Commerce has frozen Nexperia Semiconductor’s production capacity in China (no exports without permission).
In the latest developments, the Ministry of Commerce of China is soliciting opinions and preparing to include the Dutch Ministry of Economic Affairs and the Dutch Foreign Investment Review Committee in the “unreliable entity list.” The future will depend on the performance of the Dutch government; otherwise, more Dutch companies may be included in the list, with a series of hard measures in reserve.
At the same time, legal battles have already begun. Nexperia’s parent company, Wentai Technology, has directly sued the Dutch government in the Hague District Court. The originally scheduled court date in December has been moved up to November 6. The focus of the trial is whether the Dutch government has violated the “fair and equitable treatment” principle in the “China-Netherlands Investment Protection Agreement.” If the court rules that the Netherlands acted unlawfully, the Netherlands would have to pay a huge amount of compensation and lose face; if the ruling is in favor of the Netherlands, China is likely to initiate dual countermeasures involving rare earths and ASML sales, causing further turbulence in the global automotive chip market. Analysts predict that automotive chip prices may rise by 8% to 12% in the first quarter of 2026.
There is also the card of rare earths. From January to September last year, 76% of the rare earth permanent magnetic materials in the Netherlands were purchased from China, totaling 2,870 tons. Rare earths are the “industrial vitamins” essential for manufacturing high-power wind turbines and MRI machines. If China tightens export licenses, the Netherlands’ new energy and high-end medical industries will face a “cooking cutoff,” and there may even be retroactive clauses, complicating and increasing the cost of the supply chain. Once included in the “unreliable entity list,” the survival and development of related enterprises will become difficult!
According to statistics from the Ministry of Commerce, mutual investment between China and the Netherlands exceeds $33 billion. The high level of mutual investment signifies a bilateral vision based on win-win cooperation. I believe that after the Dutch side calms down, especially after China firmly confronts the United States and the U.S. has to compromise, the crisis regarding the decision-making power over Nexperia Semiconductor will be properly resolved!
The reason for this belief is the power of faith, because I believe in the strength of our motherland—China has the world’s strongest industrial system, the strongest industrial output, the strongest industrial demand, and the increasing high-tech added value, with new productive forces advancing rapidly! [Rocket][Rocket][Rocket]