When a Chinese company bought the Dutch chipmaker Nexperia in 2019, its head quickly began plotting to move research and technology to China, according to the chipmaker’s former chief executive.
The effort came as China was trying to build up its capacity in crucial semiconductor chips — and went largely unchecked.
Now, those early moves are at the heart of a geopolitical showdown, with the Netherlands caught in a struggle between Washington and Beijing over who controls critical technology. And Nexperia, which makes basic chips essential for cars and appliances, has become a vivid example of how Chinese acquisitions of foreign tech companies can become national security problems, even years later.
Dutch officials took the extraordinary step of seizing Nexperia in September, setting off a chain of events that jolted the global auto industry. They cited concerns that the Chinese owner of Nexperia — Wingtech, a tech company that is partially backed by Chinese government funds — would move key technology out of Europe.
In fact, it was clear as early as 2019, from the moment that he took control of Nexperia, that Zhang Xuezheng, Wingtech’s controlling shareholder, sought to transfer research and intellectual property to China, Nexperia’s former chief executive, Frans Scheper, told The New York Times last week.
Mr. Scheper’s account, which has not been previously reported, offers a rare look at what officials understood about the risks posed by the acquisition to the Dutch economy and the global supply chain, and when they understood them.
The company employs thousands of people across Europe, the United States and Asia, and its products are foundational to industries far beyond automotive manufacturing. Mr. Scheper said he had alerted Dutch officials to Mr. Zhang’s plans early on.
“I told them how critical the knowledge in Nijmegen, Hamburg and Manchester is,” said Mr. Scheper, referring to the Dutch, German and British cities where Nexperia has operations.
Mr. Scheper said Mr. Zhang also pressured him into early retirement in 2020. Mr. Zhang took over as Nexperia’s chief executive, underscoring his push for control. Dutch officials knew as early as 2020 that Mr. Zhang had a criminal record for stealing trade secrets in China, Mr. Scheper said.
The Netherlands only adopted a formal review process for foreign takeovers in 2023, but the Nexperia acquisition was reviewed by the Committee on Foreign Investment in the United States, a committee led by the Treasury secretary. Dutch officials also evaluated the deal at the time, Mr. Scheper said.
The basic chips made by Nexperia were not then seen as a security issue. The Dutch government became concerned about Mr. Zhang, 50, only recently, after Washington adopted a tougher line on Chinese technology, putting new pressure on European companies.
Earlier this year, U.S. officials signaled that they would adopt controls making it difficult to do business with majority-owned subsidiaries of companies that are on Washington’s “entity list.” Being on this list limits a company’s ability to purchase American software and equipment.
That mattered to the Netherlands because Wingtech, Nexperia’s parent company, was listed, accused of helping Beijing acquire and move critical chip-making technology away from U.S. allies and into China. The new controls raised the risk that Nexperia itself could soon face similar limits.
To protect a critical domestic industry, Dutch officials sought to exempt Nexperia from those controls by setting up a more independent structure, Dutch court documents say. Mr. Zhang initially cooperated with those efforts but later changed course, according to the documents.
His leadership of the company came up in June at a meeting of Dutch officials and representatives of the U.S. Commerce Department’s Bureau of Industry and Security. According to minutes quoted in the court documents, the Americans thought “the fact that the company’s C.E.O. is still the same Chinese owner is problematic.”
In October, after Dutch officials seized Nexperia, a Dutch court removed Mr. Zhang as chief executive.
For a period after the Dutch seizure, China froze exports of Nexperia chips, which are finished in China. That forced European carmakers to slow or suspend production lines.
A spokesman for the Dutch ministry of economic affairs, Milan Captein, did not directly comment on Mr. Scheper’s depiction of events. Mr. Captein said in a statement that the ministry became aware in September of “advanced plans to close or significantly scale down the European production and research sites” at Nexperia.
European countries have been slower than the United States to adopt controls of Chinese technology. The Dutch semiconductor industry wants to maintain access to the Chinese market. But it has been squeezed by Washington’s increasingly tough approach toward China.
Chip controls are one of “the very core elements of the U.S.’s China strategy,” said Frans-Paul van der Putten, an expert on China at the Clingendael Institute, a research group partly funded by the Dutch government. “But they are very harmful for the Netherlands. It creates a lot of tension between two allies.”
An Earlier Conviction in Trade Secrets
As a young entrepreneur two decades ago, Mr. Zhang spent more than a year in a Chinese detention center for stealing trade secrets. It was an early sign of his willingness to play loose with intellectual property.
In 2005, he and his associates were found guilty of taking software code from his former employer, the Chinese tech giant ZTE, and earning over 1.1 billion renminbi (about $160 million) by developing cellphones using the stolen code.
The theft led ZTE to shut down a product line, according to Chinese court documents, the details of which have not been previously reported.
Mr. Zhang was again accused of corporate violations last year, when China’s securities regulator fined Mr. Zhang, another company he controls and a former Wingtech shareholder 18 million renminbi (about $2.5 million) for hiding share purchases from the authorities.
Mr. Zhang did not respond to a request for an interview. Wingtech declined to comment. Its Dutch entity did not respond to a request for comment.
Mr. Zhang also took a risk by acquiring Nexperia, exposing Wingtech to significant debt. The Dutch outfit was more valuable than the Chinese parent, and Chinese experts likened the deal to a snake swallowing an elephant.
But Mr. Zhang was persistent. Ming-Jer Chen, a business professor who taught him in an executive M.B.A. program, said that the Chinese entrepreneur had a scroll hanging in his office that read, “Heaven rewards the diligent.”
For example, while preparing for the Nexperia takeover, Mr. Chen said, Mr. Zhang joined him on a trip to Hong Kong to meet the founder of WH Group, another Chinese company that had engaged in a large takeover — that of the American pork producer Smithfield Foods in 2013.
To ease concerns in the Netherlands about losing a key Dutch technology, Mr. Zhang promised Nexperia executives that the company could maintain its independence. But Mr. Scheper said it was clear early on that Mr. Zhang had other plans.
“He’s a figure that really wants to be involved day to day, and that annoyed people,” said Rob de Wijk, founder of The Hague Centre for Strategic Studies in the Netherlands.
A Corporate and Diplomatic Standoff
Washington, Beijing, and The Hague have all taken steps to reduce tensions, including revoking the seizure order. But the Dutch court ruling that removed Mr. Zhang as chief executive of Nexperia remains in effect. Wingtech has said it will appeal the decision.
And Nexperia’s Dutch and Chinese entities are in a remarkable standoff, with the Dutch entity accusing the Chinese one of misappropriating the company seal and “establishing unauthorized bank accounts.” Nexperia’s Chinese arm countered on Chinese social media on Nov. 28 that the Dutch one “disregards the facts” and had tried to cut China out of its supply chain.
On Dec. 2, the Dutch economic affairs minister abruptly pulled out of a trade mission to China. Beijing has asserted that the Netherlands is responsible for supply disruptions resulting from the Nexperia dispute. China’s commerce minister said in a meeting on Monday with a German official that the Dutch government should stop interfering inappropriately with business decisions, according to a summary of the meeting posted on the ministry’s website.
Mr. Zhang, for his part, has kept a low profile. In October, according to the Dutch newspaper NRC, Mr. Zhang claimed on WeChat to be a victim of discrimination.
Mara Hvistendahl is an investigative reporter on the International desk. You can reach her at [email protected]
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