Netherlands returns control of chipmaker Nexperia to China
What's the story
The Dutch government has announced its decision to relinquish control of Nexperia, a major chipmaker owned by China's Wingtech. The move comes after the Netherlands took over the company due to security concerns. The decision follows the country's talks with China amid wider efforts to ease trade tensions between the latter and the US.
Supply chain impact
Nexperia's chips are critical for global auto industry
Nexperia's chips are a key component for car manufacturers in North America, Japan, and South Korea. The importance of these chips was highlighted recently when Honda had to suspend production in Mexico due to supply issues. Now that China has lifted its export ban on these chips, there is hope that the auto industry can recover and global supply chains can stabilize.
Control reasons
Dutch government's initial control over Nexperia
The Dutch government had initially taken control of Nexperia under a rarely used law, citing national security concerns and "serious governance shortcomings." The move was aimed at preventing the loss of critical tech know-how that could jeopardize Europe's economic security. However, after "constructive meetings" with Chinese authorities in recent days, Economics Affairs Minister Vincent Karremans announced the suspension of this order as a "show of goodwill."
Corporate conflict
Nexperia's boardroom battle and US-China trade truce
The boardroom battle at Nexperia saw the ousting of its Chinese CEO, Zhang Xuezheng. US officials had advised the Dutch government that he would have to be replaced to avoid trade restrictions. In retaliation, Beijing blocked the export of Nexperia chips from its Chinese factory in early October. However, this ban was lifted recently as part of a US-China trade truce after a meeting between leaders of the two countries.