The Nexperia crisis: a wake-up call for Europe’s approach to Chinese investment

Why is Nexperia’s case so relevant?The standoff over Nexperia, a Dutch semiconductor manufacturer owned by China’s Wingtech Technology, has exposed a critical vulnerability in Europe’s economic relationship with China. The Dutch government took over management control of Nexperia in October 2025 in what began as a corporate governance dispute, but which has since escalated into a diplomatic crisis with much wider consequences. The case reveals an uncomfortable truth: Chinese foreign direct investment (FDI) into Europe may be far more volatile and geopolitically driven than European policymakers have assumed, with profound implications for supply chain resilience.The backstory explains the tensions. When Wingtech acquired Nexperia in 2019, the deal drew some scrutiny but not much, as Nexperia produces basic legacy chips – the kind used to switch lights on and off in cars and household appliances. Nexperia produces 110 billion chips annually, roughly 10% of global supply in certain industries and 40% of European automotive industry needs. In other words, Nexperia had long been systemic for the resilience of the automative supply chain in Europe, but its acquisition happened before COVID-19 when supply chain resilience was still a rather exotic concept.What happened?When Wingtech acquired Nexperia, it needed clearance from the Dutch government and also from the Committee on Foreign Investment in the United States (CFIUS), given Wingtech’s ties to Chinese state funds and Nexperia’s global footprint, including US supply chain links. Wingtech had to offer assurances that Nexperia’s European operations, headquarters, independence and strategic focus would stay in Europe. Such assurances also had a silver lining for Wingtech by releasing Nexperia from US exports controls, which applied because of Wingtech’s dual-use semiconductors and tools.However, the situation worsened when in December 2024, Wingtech was put on the US Department of Commerce Bureau of Industry and Security (BIS) Entity List and controls on Wingtech became even stricter. Maintaining Nexperia as an independent entity based in Europe offered Wingtech the advantage of being able to source dual-use advanced chips into – or through – Nexperia. This suddenly ended on 29 September 2025, when the US BIS extended, with immediate effect, the Entity List to any foreign affiliate controlled by a listed entity (ie Nexperia via Wingtech).One day later, on 30 September, Dutch Economic Affairs Minister Vincent Karremans invoked a Cold War-era law to seize temporary control of Nexperia, blocking assets and tech transfer. The primary reason offered by the minister was to address serious governance shortcomings at the company that posed an immediate threat to the continuity of crucial technological knowledge and production capabilities on Dutch and European soil. Soon after, a Dutch court removed the company’s Chinese CEO, Zhang Xuezheng, citing evidence that Zhang was planning to move the production, intellectual property and even financial resources of Nexperia to Wingtech in China.Beijing’s reaction to the Dutch government’s decision was as immediate as it was strong. On 4 October, the Ministry of Commerce halted exports of Nexperia chips produced in its Dongguan facility, triggering sudden disruption in European and global automotive supply chains.DeescalationOne outcome of the 30 October summit in Busan, South Korea, between President Donald Trump and President Xi Jinping, was a de-escalation of trade tensions. In particular, the new US affiliate rule (ie the inclusion of affiliates of Chinese companies in the Entity List) was suspended for one year. This eased pressure on Nexperia to comply with US restrictions, reducing the risk of full operational isolation, which was a concern for China’s Wingtech. In response, on 9 November, China lifted its export ban on Nexperia-produced chips from its Dongguan facility.Finally, and after enormous pressure from China, on 19 November, Minister Karremans suspended the government’s temporary control over Nexperia as a ‘gesture of goodwill’ to China. The suspension restored day-to-day operations under court-appointed custodians, but retained the Dutch right to reinstate control if threats to production, intellectual property or supply chains reemerge. In late November, chip flows resumed to key customers.And yet, not everything is back to normal. Wingtech rejected the suspension as insufficient, demanding full restoration of its control over Nexperia. The Chinese government continues to criticise the seizure as an attempt to ‘decouple’ Nexperia from its parent.In essence, the crisis was resolved for immediate supply chain stability, averting a broader economic meltdown. However, the core issues – governance, ownership control and technology transfer risks – persist in a simmering legal and diplomatic feud, with potential for re-escalation if talks fail.Lessons learned and call for actionThe Nexperia saga illustrates how Chinese FDI operates under a fundamentally different logic to traditional market-driven investment: it is inherently conditional and reversible, based on geopolitics. When Wingtech acquired Nexperia, it wasn’t simply a private equity play. The acquisition was made possible by Beijing’s huge industrial policy push to increase its power over the global semiconductor supply chain.In the same vein, Zhang Xuezheng’s decision to move production to China wasn’t merely about efficiency or cost reduction. It was driven by the change in US export control regulation, which had the effect of removing any benefit for Wingtech from Nexperia being located in Europe. In other words, a sudden geopolitical shift made Nexperia’s European operations less valuable to Beijing’s broader strategic interests.The case also exposes Europe’s lack of strategic foresight in managing foreign acquisitions. When Nexperia was sold to a Chinese firm, European authorities had no effective tools to impose conditions or monitor compliance. The EU has moved since, with EU-level inbound investment screening, but this does not mean Europe is ready to avert future risks posed by inbound investment from China, or to resilience of European supply chains. The current set up only coordinates national-level reviews of foreign investments that could threaten EU security or public order, particularly in critical sectors such as semiconductors, but decisions are not binding, relying on voluntary national implementation.Several policy considerations emerge from the aftermath of the Nexperia crisis. The EU should take these into account in ongoing discussions on economic security.First, Europe desperately needs its own version of CFIUS with real enforcement power: a centralised inter-agency body with binding authority. Such authority could establish conditions that prevent technology and production from being stripped out of acquired companies.Second, Europe should implement outbound investment screening that applies to foreign-owned companies registered in Europe. If Nexperia, despite its Dutch registration, attempts to transfer technology back to China, this should trigger review mechanisms.Third, European industries must diversify their supply chains away from geopolitically sensitive suppliers. This applies whether those suppliers are in China, or technically in Europe but controlled by Chinese entities. The automotive sector’s lack of preparedness for supply chain disruption, despite the experience of the COVID-19 pandemic, is inexcusable. Building redundancy costs money, but supply chain disruption costs far more.The Nexperia case should thus shatter any remaining illusions about the nature of strategic Chinese investment in Europe. These are not purely commercial transactions subject to market logic. They are instruments of state policy, conditional on geopolitical circumstances, and reversible when Beijing’s strategic calculus shifts. Europe has treated Chinese FDI as economically beneficial and essentially stable, assuming that once factories are built and jobs created, they will remain. Nexperia demonstrates that this assumption is dangerously naive. Europe must develop robust frameworks for protecting strategic technologies and production capacity while maintaining openness to legitimate foreign investment, including from China. This requires distinguishing between market-driven FDI and state-directed strategic investment, and treating them accordingly.*This is a reprint. This article has been published as part of Bruegel Zhonghua Mundus Newsletters within the EU Project China./bruegel/zhnghu-mundus-10631257