Dutch court's Nexperia ruling must be free of geopolitical manipulation

The root cause of the disruption in the global semiconductor supply chain lies with the Netherlands and its government's geopolitical intervention into the business operations of Dutch-based company Nexperia, whose parent company, Wingtech, is Chinese.

The Amsterdam Enterprise Court ruled in a preliminary decision in October last year that there were "well-founded reasons to doubt" the Dutch company was being managed correctly and suspended its previous CEO, Wingtech founder Zhang Xuezheng, over "reckless leadership".

The ruling came after the Dutch government seized control of the company in September, citing "fears" it was transferring operations and intellectual property to China. The takeover, however, was widely believed to be at the behest of the United States as part of its crackdown on Chinese high-tech enterprises globally, since the Dutch government's move occurred shortly after the US put Wingtech on its "entity list" before expanding it to also include Nexperia.

The court held hearings on Wednesday to decide whether to order an investigation into allegations of the company's mismanagement or revoke its previous ruling. Lawyers for Nexperia and its Chinese owners faced off in the Amsterdam courtroom. No immediate decision is expected.

China has held a consistent stance that business disputes should not be politicized, and has criticized the Netherlands for its rash decision to interfere in the normal operation of Nexperia in gross violation of market principles. It has also expressed firm opposition to the Dutch government's overstretching of national security to justify its move. The China Semiconductor Industry Association also issued a statement voicing opposition to the Dutch side's intervention in Nexperia, which, it said, has violated the spirit of contract and will ultimately backfire and damage the Netherlands' business environment.

Following two rounds of talks between government officials of the two countries, held in Beijing, the Dutch government suspended its administrative order concerning Nexperia in November.

The case has drawn wide attention due to its implications for the global semiconductor industry, which is already facing unprecedented challenges. The shortage of automotive chips, exacerbated by this dispute, has had ripple effects across the automotive and electronics sectors, highlighting the interconnected nature of global supply chains. The stakes are high, not just for the companies involved, but for the stability of global trade and technological progress.

At the heart of the issue is the need to ensure that commercial disputes are resolved based on market principles and legal frameworks, rather than being influenced by geopolitical considerations. Attempts to intervene in economic activities with a geopolitical agenda only hinder progress and create barriers to cooperation.

It is a pity that some politicians in the Netherlands, out of ideological bias against Chinese high-tech enterprises, are seeking to maintain control over Nexperia and its key technologies in their support for European management of the company. Such an approach risks turning a commercial dispute into a geopolitical battleground, which would be detrimental to all parties involved. The conflict, which has severely disrupted the global automotive chip supply chains, needs a resolution free from geopolitical interference.

There is no denying that Chinese enterprises in the European Union are now facing increasingly stringent security reviews given the "de-risking" policy being adopted by many EU countries. But Beijing will resolutely defend Chinese enterprises' legal rights and interests.

As the Dutch court hears the case, it is crucial that in making its decision it prioritizes fairness, transparency and the long-term health of the global economy.

The semiconductor industry is a global endeavor that transcends national borders. The global economy depends on a stable and predictable semiconductor supply chain, and disputes within the sector should be resolved through dialogue and legal processes that respect the principles of free and fair competition.

Any decision that undermines the stability of the supply chain will harm the whole industry in the long run. Revoking the previous ruling and restoring Wingtech's legitimate control over Nexperia would not only stabilize the global chip supply chain, but also send a positive signal about the Netherlands' commitment to maintaining an open and predictable business environment.

The global semiconductor industry thrives on collaboration, innovation and a level playing field, and introducing nonmarket factors into this dispute undermines the very principles that have driven the industry's success.

It is time for all stakeholders to reaffirm their commitment to fair competition and collaboration, ensuring that the semiconductor industry remains a driver of growth and technological progress, not a pawn in geopolitical games.