AMSTERDAM (Reuters) – The Netherlands’ decision to take control of chipmaker Nexperia in September was prompted by fears that the company’s former chief executive was already dismantling the company’s European operations and moving production to China, four sources in The Hague familiar with the government’s thinking said on Monday.
A month-long standoff between China and the Netherlands over Nexperia has led automakers in Europe, the United States and Japan to warn of potential production problems due to chip shortages. Although the chips manufactured by Nexperia are very basic, they are used in large quantities in automobile electronic systems.
Sources in The Hague said former Nexperia CEO Zhang Xuezheng, who is also the founder of Nexperia’s Chinese parent company Wingtech, had planned to lay off 40% of staff in Europe and close a research and development facility in Munich.
Before a Dutch court suspended Zhang from the CEO position on Oct. 1, he had already transferred secrets from the company’s plant in Manchester, Britain, to a plant owned by Wingtech in China, including chip designs and machine configurations, they said. They added that the physical equipment from the company’s production plant in Hamburg would next be moved.
Zhang could not immediately be reached for comment.
The Dutch government took control of Nexperia on September 30, citing governance failures. On October 4, the Chinese Ministry of Commerce blocked exports of the company’s products outside of China. While most of Nexperia’s chips are produced in Europe, around 70% are packaged in China before distribution.
The Chinese arm of the company has taken steps toward independence and has resumed selling products to domestic Chinese customers.
Sources said the Dutch government believes it can negotiate a resolution with China that will restore the company to a unified Dutch-Chinese structure.
(Reporting by Toby Sterling, Editing by Rosalba O’Brien)