Netherlands Takes Over Chinese-Owned Chip Firm Affected by BIS 50% Rule

The Netherlands Ministry of Economic Affairs announced this month that it had invoked its Goods Availability Act to remove Zhang Xuezheng as Nexperia's director and take control of most voting rights for its shares, which were previously indirectly held by parent company Wingtech Technology, a Chinese firm that was added to the BIS Entity List late last year (see 2412020016).

The Dutch government said it was concerned about “serious governance shortcomings” at Nexperia, adding that the intervention is aimed at preventing a “situation in which the goods produced by Nexperia (finished and semi-finished products) would become unavailable in an emergency.”

The decision came about four months after Dutch foreign affairs officials met with the U.S. State Department’s Bureau of International Security and Nonproliferation in June, according to Dutch court documents, where U.S. officials suggested that Nexperia could soon face new U.S. export restrictions under the not-yet-published BIS Affiliates Rule. That rule, which was released Sept. 29, extended certain BIS end-user controls to majority-owned affiliates of parties on the Entity List and other lists (see 2509290017).

The court filing, published Oct. 14, said the Netherlands had long been in discussion with Nexperia to resolve concerns over the company’s Chinese ownership, and U.S. officials complained to Dutch officials at the June meeting that “no externally visible measures have been taken. It is understandable that a divestment takes time (...) but the fact that the company's CEO is still the same Chinese owner is problematic,” according to a translation of the court filing, which cited minutes from the U.S.-Netherlands meeting.

The Dutch government earlier that month had informed Nexperia “about the possibility of the US introducing a so-called 50% rule,” the court filing said. The government also told Nexperia that the U.S. might be open to granting Nexperia an exemption from the 50% rule restrictions, but it’s “almost certain” that the Nexperia CEO “will have to be replaced to qualify for the exemption from the entity list,” the court filing said, again citing minutes from the U.S.-Netherlands meeting.

The court also noted that Nexperia had previously agreed with the Dutch Ministry of Economic Affairs and Climate Policy about certain "governance changes," but it moved with a "lack of swiftness" to implement those changes.

"Certainly from the moment Wingtech was placed on the Entity List, it must have been clear to [the company's CEO], as director of Nexperia, that implementing the measures agreed upon in consultation with the Ministry of Economic Affairs and Climate Policy was necessary to prevent Nexperia and its company from increasingly suffering the adverse consequences of the perceived influence of its Chinese shareholder," the court said. "Nevertheless, no steps were taken to adjust the governance in the interests of Nexperia and its company. This was not even the case when it became clear in June 2025 that there was a significant chance that the 50% rule would be implemented, which would also directly affect Nexperia by [increasing] trade restrictions from the United States."

The Netherlands Ministry of Economic Affairs officially seized control of Nexperia on Sept. 30, one day after BIS released its new 50% rule restrictions. Nexperia's manufacturing and research and development facilities in China, Malaysia and the Philippines became subject to the rules Sept. 29, “while the rules for Nexperia will not apply until after 60 days,” the filing said, referring to the rule’s temporary general license.

Nexperia said it was told by the Netherlands that the company’s operations in Europe were “being compromised in an unacceptable manner,” raising concerns about Dutch access to semiconductor products that are “critical to the European industry.”

Under the Dutch order, the company is banned from relocating company parts, firing existing executives and making other decisions without “explicit permission from the Dutch government for a period of a year,” Nexperia said. “This order is intended to prevent the goods manufactured by Nexperia from becoming unavailable, thus protecting Dutch and European economic security.” The firm added that it's expecting its “day-to-day operations” to continue.

Nexperia also noted that its operations are affected by the BIS Affiliates Rule because it’s a “wholly owned subsidiary” of Wingtech.

“While Nexperia has made sufficient preparations to ensure business continuity -- and as the BIS rule provides for a 60-day grace period -- we are confident that a solution will be found,” it said.

Wingtech said “we firmly oppose the politicization of commercial issues,” arguing that the Dutch government’s intervention is “excessive” and “based on geopolitical bias rather than a fact-based risk assessment.” The measure “seriously violates the market economy, fair competition, and international trade rules consistently advocated by the European Union. We strongly protest this discriminatory treatment of Chinese companies,” Wingtech said, according to an unofficial translation.

In addition, Nexperia noted that China earlier this month “issued an export control notice prohibiting Nexperia China and its subcontractors from exporting specific finished components and sub-assemblies manufactured in China.” The company said it’s speaking with Chinese authorities “to obtain an exemption from these restrictions and has deployed all available resources to that end. Nexperia is in close dialogue with all relevant national and local government authorities to mitigate the impact of this measure.”