Netherlands takes over the Chinese company Nexperia – nationalization in the shadow of the law?

On Monday, October 13, 2025, the Dutch government announced the acquisition of control of Nexperia, a Dutch semiconductor manufacturer, presently 100% owned by Chinese Wingtech Technology. The decision was taken due to concerns about the transfer of key technologies to China and "serious administrative shortcomings" in company management. The Dutch Ministry of Economy stressed that it was a unique intervention aimed at protecting European and Dutch economical interests and technological security.

Nexperia, formerly part of Philips, is 1 of the world's largest manufacturers of simple semiconductors – diodes and transistors – but besides develops advanced technologies, including battery optimization.

Wingtech acquired the company in 2018 for about US$3.63 billion.

Are the actions of the Netherlands lawful?

From the point of view of national law, yes. The Netherlands, like many EU countries, has abroad investment screening mechanisms, especially in strategical sectors specified as semiconductors. In 2020, the Netherlands introduced a law to block transactions at hazard for national safety reasons. In this case, the government not only blocked the decisions of the board, but appointed an independent associate with a decisive right, which is possible under crisis law or supervision of strategical enterprises.

However, from the position of global investment law, the issue is more complex. Chinese companies investing abroad are based on the principles of investment protection, frequently contained in bilateral investment promotion and protection agreements (BIT). The Netherlands and China signed specified an agreement in 1985, which guarantees:

• Fair and equal treatment of investors,
• Protection against arbitrary execution or nationalisation without adequate compensation,
• Freedom to transfer profits and capital.

If the Netherlands does not supply full compensation or proves that action was essential for national safety (and was not protectionist), Wingtech can file a suit in an global tribunal under this agreement.

It is worth noting that direct nationalisation did not take place – the government did not expropriate the company, but restricted the rights of the owner in the name of security. It's a subtle but crucial difference from the point of view of the law.

Reactions in the Netherlands and Europe

In the Netherlands, the decision faced divergent reactions:

• Government supporters (mainly centre and right-wing parties) argue that the semiconductor sector is strategical for Europe's technological sovereignty and China cannot be allowed to control key supply chains.
• Critics, including any legal experts and economists, inform against investment policy and investment climate degradation. They indicate that the Netherlands may lose investor assurance if it applies specified measures without transparent evidence of threat.
• Dutch media (e.g. NRC Handelsblad, De Volkskrant) stress that there is no public evidence of the actual infringement by Wingtech or Nexperia.

In the European Union, the situation is observed with attention. The European Commission supports national investment control mechanisms but at the same time calls for proportionality and transparency. erstwhile cases (e.g. the blockade of Leifheit by a Chinese company in Germany) show that the EU allows specified interventions – but only with clear reasons for safety.

What can the Chinese authorities do?

The Chinese authorities have respective consequence options:

1. Diplomatic protests – China MFA can call on the Netherlands to explain and request respect for investor rights.
2. Retaliatory measures — although improbable to be taken against the Netherlands (an crucial trading partner), Beijing can strengthen control over European companies in China, for example in the technological or energy sector.
3. International suit – as mentioned, Wingtech can usage the Chinese-Dutch Investment Agreement and apply to the global Investment Dispute Settlement Centre (ICSID).
4. Narrative run – Chinese state media (e.g. Global Times) may present the incidental as an example of "Western techno-protectionism" and "discrimination of Chinese companies".

Should another Chinese companies be concerned?

Yes – especially in strategical sectors. For respective years we have seen a global trend in reducing Chinese investments in key technologies: semiconductors, artificial intelligence, 5G, critical infrastructure. EU, US, UK and Japan are introducing increasingly stringent control mechanisms.

In particular:

• Companies located on the American "Entity List" (as Wingtech since December 2024) become automatic control targets in allied countries.
• The fresh US regulations of September 2025, which automatically sanctioned subsidiaries, increased force on European governments.

For Chinese investors, this means a request to be more careful, to separate European operations from the parent structures and to build local political and business alliances.

The Devil is in the details

Situation described seems to be stretching the limits of investment law – especially if missing specific evidence publically available the alleged ‘serious administrative shortcomings’ or the hazard of technology transfer.

The Dutch government referred to: "acute signals of serious administrative shortcomings and actions"
and "threat to the continuity and safeguarding of cruel technological knowledge".

However, no circumstantial facts were disclosed, documents, breaches of export law or evidence of cooperation with Chinese services. In administrative law – especially in the case of Infringement of ownership – the standard of proof should be highand justification detailed and verifiable.

In practice:

• This. There's no court verdict.but the administrative decision of the government.
• Court in Amsterdam suspended the Chinese president (Zhang Xuezhenga) on the basis of a government proposal – but besides without public substantive justification.
• This situation gives emergence to reasonable suspicions that the decision has Political natureNot legal.

Each State has the right to restrict ownership in the name of national security – but not without conditions:

(a) Proportionality principle

Intervention must be:

• necessary (no softer measures),
• appropriate (really protects safety),
• sustainable (safety benefit > harm to investor).

In this case:

• Nexperia did not produce advanced systems (e.g. EUV, like ASML), but diodes and transistors – technologies available globally.
• The company has repeatedly declared compliance with EU and US export regimes.
• Wingtech says Nexperia works independently – which is standard practice in global holdings.

If the government doesn't show that these declarations were false or that they happened actual hazard of technology disclosureintervention may be considered to be disproportionate.

(b) International investment protection

The Netherlands and China are parties The 1985 Bilateral Investment Treaty (BIT)which guarantees:

• Fair and equal treatment (fair and equitable treatment — FET),
• Full protection and security,
• Prohibition of arbitrary enforcement or indirect nationalisation without quick, adequate and effective compensation.

In case Wingtech loses his chance:

• appointment of the Management Board,
• making strategical decisions,
• dividends or reinvestments of profits,

...then possibly consider that his investment has been devalued – which is the basis for Investment suit before an global tribunal (e.g. ICSID).

Note: Wingtech paid USD 3.63 billion in 2018 in fully in accordance with Dutch and European law. The transaction has been approved by the Dutch authorities – meaning that the hazard of "Chinese influence" was already known at the time. Therefore, the current intervention can be seen as retroactive change rules game - What's up? violation of the rule of legal certainty (legal certificates), key to EU and global investment law.

For Chinese companies, the situation is clear: Europe is becoming a more hard investment area, especially in sectors affecting national security. A decision towards Nexperia can become a precedent – not only for the Netherlands, but for the full European Union. For the Netherlands itself, in the absence of evidence justifying the decision, the action of the Dutch Government may be considered a breach of the Netherlands' global obligations to abroad investors – which makes this situation not only controversial but possibly costly for the Dutch State itself.

Sources: Reuters, Nikkei Asia, Ministry of Economy of the Netherlands, Chinese Stock Exchange Notices (Wingtech), EU Investment Law Analysis, Global Times, De Volkskrant.

Leszek B. Glass

Email: [email protected]

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