Investment Screening and the Nexperia Crisis: Would It Have Made a Difference?

Author: Frans-Paul van der Putten (Founder, ChinaGeopolitics)

Introduction

Five months have passed since the interventions by the Dutch ministry of Economic Affairs and the Enterprise Chamber of the Amsterdam Court of Appeal that took away control of Dutch chipmaker Nexperia from its Chinese parent company Wingtech Technologies. Looking back at what happened, now that the media frenzy has subsided, this contribution assesses what this episode in Dutch semiconductor history can tell us about FDI screening.

What is, or could have been, the role of of investment screening in the Nexperia crisis: Would the Dutch Security Screening Act have made a difference had it been applicable and applied at the time of Nexperia’s acquisition by Wingtech? What difference would it have made exactly?  And what lessons can be drawn from this for European policymakers?

Background

When the Dutch Security Screening Act (SSA) became active on 1 June 2023, it was applicable not only to current and future instances of direct investment but also to past transactions that took place in the period from 8 September 2020 to 31 May 2023. The SSA is aimed at detecting and preventing national security threats that arise from foreign direct investment (FDI) in Dutch companies. It covers, inter alia, instances of FDI in Dutch entities that possess specific, in-house knowledge for the production of semiconductors, industrial machines for the production of semiconductors or design software for semiconductors.

Nexperia is a Netherlands-based enterprise that develops and produces basic (or ‘legacy’) semiconductors for use in a wide variety of products including cars, mobile phones, telecommunication equipment and IoT (Internet of Things)-applications. This means that, had the acquisition of Nexperia by Wingtech Technologies occurred on or after 8 September 2020, the Dutch government would have had the opportunity to formally screen that transaction for potential national security risks. However, this did not happen as Wingtech already obtained a controlling stake in Nexperia on 24 December 2019.

Still, on 30 September 2025 the Dutch government did intervene by severely restricting Wingtech’s operational control of Nexperia. A day later the Enterprise Chamber of the Amsterdam Court of Appeal ruled that, pending an investigation it was to conduct, Wingtech’s control of its Dutch subsidiary was to be severed even more thoroughly. The Enterprise Chamber declared that it took this action at the request of Nexperia itself (via its Chief Legal Officer, a Dutch national) and because there were indications of serious mismanagement by the CEO of Nexperia (a Chinese national, who was also the founder of Wingtech and the owner of circa 15% of Wingtech’s shares). The Enterprise Chamber acted unusually fast in this instance, without first hearing the CEO or other involved parties.

The Dutch government’s intervention was based on a legislative act from 1952 aimed at safeguarding the availability of strategic goods during an emergency. The minister of Economic Affairs, who made the decision to intervene, later publicly argued that the intervention was necessary because Wingtech was about to transfer knowledge and assets from Nexperia locations in Europe to China. This, according to the minister, would have jeopardized Europe’s access to semiconductors. The Enterprise Chamber’s intervention was also influenced by the Dutch government: it stated that the latter’s conviction that Dutch and European economic security was at stake and that the matter was highly urgent contributed to the Chamber’s decision.

The minister’s action led to a deterioration in Dutch-Chinese diplomatic relations and a temporary rupture in semiconductor deliveries to Nexperia’s customers in Europe and elsewhere. The rupture was caused by Chinese retaliatory restrictions on Nexperia’s exports from China, where the company assembles the bulk of its semiconductors. Whereas the front-end part of Nexperia’s production takes place in Europe, particularly in Germany and the UK, the back-end part is located primarily in China. Currently, the crisis is ongoing as Wingtech has control of Nexperia’s main assembly site in Dongguan, China, but not of the Nexperia head office in the Netherlands, which controls the company’s non-Chinese assets and activities in Europe, Asia and the United States. Some of Nexperia’s customers have had to act as intermediaries between the company’s European and Chinese sides. Given this and the uncertainty regarding possible new disruptions, it seems likely that they will progressively switch to other suppliers. Meanwhile the Chinese government keeps pressuring the Netherlands to do more to remedy the situation.

Two potential intervention moments

When Wingtech Technologies gained a controlling interest in Nexperia, Nexperia was already owned by other Chinese investors. On 7 February 2017 Nexperia’s ownership had changed from NXP, a Dutch semiconductor company, to JAC Capital, a Chinese state-owned investment company, and Wiseroad Capital, a Chinese private equity firm. The NXP-JAC/Wiseroad deal was announced in June 2016 and remains the largest single instance of Chinese direct investment in the Netherlands, at 2,45 billion euros. A couple of years later, on 24 October 2018, Wingtech Technologies announced that it intended to acquire Nexperia from JAC and Wiseroad. More than a year later, on 24 December 2019, Wingtech indeed obtained a controlling stake in Nexperia. In short, there were two instances that could potentially have triggered Dutch government intervention had there been an operational screening instrument: in 2016-2017 when NXP sold Nexperia to JAC and Wiseroad, and in 2018-2019, when Wingtech became its latest owner.

It is relevant to take note of the conditions under which these two separate transactions took place. In June 2016, NXP’s Standard Products division was incorporated as Nexperia, thereby becoming a wholly-owned subsidiary, in order to be sold to JAC and Wiseroad. NXP had been looking for a buyer of Standard Products since circa 2013, as it wanted to concentrate on more advanced semiconductors with a greater profit margin. While the Dutch government did not screen this first transaction, at the time, the US government did. On 17 October 2016, NXP declared that the Committee on Foreign Investment in the United States (CFIUS) had cleared the sale of Nexperia to JAC/Wiseroad. Only 9 days later, on 26 October 2016, US semiconductor maker Qualcomm announced that it intended to take over NXP at US$47 billion (or some 43 billion euros). The latter deal, however, was never completed as the Chinese government effectively blocked it in 2018: China’s State Administration for Market Regulation (SAMR) did not give antitrust approval for the merger. It seems possible that China withheld approval in an attempt to gain leverage in the trade war with the US that had started in the same year.

In 2016, the Dutch government’s position on FDI screening was that no centralized, generic screening mechanism was necessary or desirable, as it generally favoured free cross-border flows of FDI, both outgoing and incoming. At that time Nexperia’s products (low-cost, basic semiconductors) were not seen as cutting-edge technology that needed to be protected. And NXP itself, the selling company whose remaining semiconductor products were far more advanced, seemed to be about to become a US-owned subsidiary. Possibly NXP, which agreed to be acquired by Qualcomm, was eager to sell off Nexperia (which it did not regard as a core asset) in order to reduce some of the 11 billion euro debt that it had incurred in 2015 after taking over Freescale Semiconductor, a US firm. CFIUS did conduct a screening review and saw no reason to block the deal, which is relevant since at the time the US government had already become more hawkish on Chinese investment - think of how Obama blocked the US-leg of the Chinese acquisition of German chip equipment maker, Aixtrom. In short, there seemingly were no security issues at stake and the sale of Nexperia benefited all major stakeholders. Indeed, after the Chinese take-over, Nexperia’s head office remained in the Netherlands and its sales grew rapidly.

When Wingtech acquired Nexperia in 2018-2019, CFIUS once more screened and cleared the transaction. By this time, the US government was communicating to the Netherlands that it was concerned about Dutch exports of advanced semiconductor equipment to China. The Dutch government had also slowly changed its view of investment screening, and was making preparations for what was to become the SSA. However, the Wingtech acquisition seemed not to have been controversial, supposedly because it did not involve advanced technology. In the summer of 2019, for example, the Dutch authorities applied export controls to restrict the sale of ASML’s most advanced semiconductor manufacturing equipment, without attempting to block Wingtech’s acquisition of Nexperia (to the extent that this was possible at that time).

In subsequent years, Nexperia itself invested in other European semiconductor companies. In July 2021 it acquired Newport Wafer Fab, a semiconductor wafer factory in the UK. Initially this transaction was cleared by the British government, but in May 2022 the Secretary of State for Business, Energy and Industrial Strategy (BEIS) retroactively blocked the acquisition and ordered its divestment. The Secretary of State argued that Nexperia’s involvement in the factory could endanger British national security through ‘a potential reintroduction of compound semiconductor activities at the Newport site’ which might ‘undermine UK capabilities’, and potentially undermine the ability of other knowledge organisations based near the factory’s to engage ‘in future projects relevant to national security’. Later in 2022, Nexperia bought Nowi, a Dutch start-up specialised in making battery replacing chips. Shortly after the Security Screening Act became active in June 2023, the Dutch authorities retroactively screened the Nowi takeover. By November of the same year they cleared the transaction, having conclude that Nowi products were of neither a military nor a dual-use nature.

What is at stake?

After his intervention in Nexperia, the Dutch minister of Economic Affairs declared that he did so because he was concerned that European manufacturing companies would lose access to Nexperia’s semiconductors, a key input for many industrial products. Indeed, Europe’s dependence on Nexperia semiconductors became painfully clear in October-November 2025 when China - in retaliation for the Dutch intervention - stopped the export of Nexperia chips and several carmakers in Europe and elsewhere seemed on the verge of having to scale down the production of cars because they were running out of chips. Much industrial manufacturing depends on access to basic semiconductors in order to function and China has become a key supplier of such raw materials.

Perhaps Wingtech was planning to move some key Nexperia assets from Europe to China, as the minister of Economic Affairs claimed. But the company’s assembly activities have long been largely concentrated in Dongguan, which means that the Chinese government already had the power to halt supplies to European manufacturers. In the short term, the Dutch intervention triggered rather than prevented a supply shortage.

The core issue is not Chinese ownership of Nexperia, but rather whether a major non-European power can easily restrict Europe’s access to basic semiconductors. This applies to China because that is where Nexperia’s back-end assembly plant is located, as well as to the US, which similarly has significant leverage over Europe’s semiconductor supply chain. This is clear from the fact that - although CFIUS twice allowed the acquisition of Nexperia by Chinese investors - the crisis as it erupted in 2025 was triggered by the US government. At that time, the US prepared to widen the scope of its export control regime to include Nexperia (as well as a large number of other companies) through its extension of the applicability of its Entity List to include subsidiaries that were at least 50%-owned by companies already on the list. Considering that Wingtech Technologies was put on the US entity list in December 2024, Nexperia would face export controls as well, severely limiting its ability to sell its chips to major customers such as BMW and Stellantis.

In the course of the summer of 2025, tensions indeed had been growing between Wingtech and the Dutch government as they sought to find a way to protect Nexperia from the effects of the looming US action. The two sides had different views of which steps were desirable, with the Dutch side pushing for a dilution of Wingtech’s level of control over Nexperia as a way to convince the US regulators that, as an exception, the company should not be on the Entity List. US officials had communicated to their Dutch counterparts that, for Nexperia to potentially stay off the Entity List, it would need to replace its Chinese CEO and install measures to prevent the transfer of knowledge from Europe to China. No solution had yet been found when, sooner than expected, the US government on 29 September 2025 announced the introduction of the 50% (or ‘affiliates’) rule, which would result in Nexperia being put on the Entity List by late 2025. This effectively created the circumstances in which the Dutch government the following day intervened against Wingtech, apparently convinced that the company was about to transfer knowledge to China which would end all prospects of Nexperia staying off the Entity List.

Notably, it is not just the US and China exerting influence over the functioning of Nexperia separately, but also jointly. Presidents Trump and Xi met in South Korea in late October 2025 where they discussed the Nexperia crisis, among other topics. This led to an understanding by which the US postponed the activation of the 50%-rule until 10 November 2026 and China resumed exports of Nexperia chips.

Conclusion

It seems unlikely that the Dutch government would have blocked Nexperia’s takeover in 2017 if an investment screening mechanism had been available. Given the clearance that CFIUS gave, the Dutch government may also not have blocked the second takeover in 2019. Moreover, the Nowi acquisition was cleared in 2023 even after the introduction of the SSA, even though it is not clear to what extent that particular screening related to Nexperia’s technological capabilities rather than Nowi’s. Had the Dutch government nonetheless prevented Nexperia from getting a Chinese ownership then obviously the risk of being placed on the US Entity List would not apply to Nexperia, and there would not have been a resulting crisis. However, as long as Nexperia relies on its Dongguan plant, the Chinese government remains capable of disrupting Europe’s access to Nexperia chips.

What the Nexperia case shows that European governments need three things in particular:

• Clear mitigation practices: EU member states need an investment screening approach that is focused on imposing conditions that mitigate external dependencies. Chinese investment has helped Nexperia to grow faster once it became independent from NXP. It should have been possible for the Netherlands to allow Chinese actors to invest in Nexperia while creating guarantees through the conclusion of mitigating conditions that would have provided legal guarantees that key assets of the company would remain European. This would have, legally speaking, diminished the risk of one-sided dependence on China. However, it should be noted that the Dutch government imposed conditions only in a few cases since the SSA became active (1 in 2023 and 3 in 2024).

• Predictable ex-post intervention: Governments in Europe need the capacity to act after the investment has been made. As geopolitical contexts change, so can the strategic relevance of foreign-owned assets change. But rather than act abruptly on the basis of obscure Cold War laws, governments that decide to intervene post-investment for security or geopolitical reasons should do so on grounds that are predictable and transparent to investors. In order to combine predictability with flexibility, such grounds can either be linked to the conditions under which the original investment was cleared, or to adopt a set of key principles that applies to all instances of FDI.

• Geopolitical resilience: Europe urgently needs an increased capacity to push back against US and Chinese policies that are geopolitically motivated and that threaten the functioning of European semiconductor companies and their supply chains. The EU’s Anti-Coercion Instrument (ACI) was created for this purpose. As the ACI is intended to function as a deterrent with a major potential impact, and therefore to be used only in extreme instances, the EU needs to develop capabilities that have a similar purpose but that can be used more flexibly at a lower stage on the escalation ladder.