European Firm Entangled in U.S.-China Trade War
In a significant development in the ongoing U.S.-China trade conflict, tensions have escalated in the Netherlands. The Dutch government recently took control of Nexperia, a chip maker owned by the Chinese company Wingtech. This decision came amid increasing pressure from U.S. officials, highlighting the global struggle for dominance in tech supply chains.
Nexperia’s Role in the Chip Industry
Nexperia, headquartered in the Netherlands, designs older chip types used in automotive and electronic applications. The company operates a complex supply chain tied to various global locations, including:
- Silicon wafer production in Britain and Germany
- Assembly and testing in China, the Philippines, and Malaysia
With thousands of employees across Europe, the U.S., and Asia, Nexperia plays a vital role in the semiconductor industry. On September 30, the Dutch Minister of Economic Affairs, Vincent Karremans, announced that government decisions regarding Nexperia would now be made at the state level.
U.S. Trade Restrictions Impact
The United States has placed trade restrictions on Wingtech since December, as part of a broader effort to monitor Chinese influence in technology sectors. In June, U.S. officials informed the Dutch government that unless Nexperia replaced its Chinese CEO, Zhang Xuezheng, it could face consequences.
In response to these pressures, the Dutch government aimed to secure the availability of Nexperia’s products during emergencies, as reflected in their recent actions. However, court documents revealed that U.S. officials had been in discussions with the Dutch government for months prior, emphasizing the problematic nature of the company’s leadership.
Global Implications of the Trade War
Nexperia’s acquisition is one of many instances illustrating the broader battle between the U.S. and China for control of semiconductor supply chains. Both countries have made significant attempts to gain authority over these crucial assets, as highlighted by Reva Goujon from the Rhodium Group.
- The U.S. and China both desire greater control over technology.
- Governments are uncomfortable with the current levels of Chinese ownership in tech sectors.
Chinese firms have increasingly bought foreign companies to advance domestic industries, despite facing challenges in producing cutting-edge chips. U.S. and European authorities have voiced concern over China’s potential to dominate older chip markets, which are essential for automobiles and various appliances.
Responses from China
In reaction to the Dutch government’s takeover, China’s Ministry of Commerce imposed restrictions on Nexperia, preventing its Chinese units from exporting specific products. The company is currently seeking an exemption from these limitations. The Ministry criticized the U.S. for undermining global supply chain security.
Future of Technology Manufacturing
The ongoing rivalry between the U.S. and China continues to unfold, with both nations exploring ways to regain control over critical technology sectors. Goujon suggests that the momentum for retaining manufacturing strength has been escalating for some time, and a careful balance must be maintained in diplomatic relations surrounding global supply chains.
