Dutch retreat on Chinas Nexperia signals faster chip decoupling

The Dutch government’s latest decision to halt its intervention in Nexperia, the Chinese-owned chipmaker, may ease tensions with Beijing but it underscores what analysts describe as an accelerating Western push to decouple from China’s semiconductor supply chain.

To understand the dynamic, start with the less-than-two-months sequence of events leading up to and including the latest Dutch move.

• On September 29, the US Bureau of Industry and Security expanded its Entity List rules to automatically cover any firm majority‑owned by a sanctioned entity.
• On September30, the Dutch government invoked the Goods Availability Act to take temporary control of Nexperia, citing “serious governance shortcomings.”
• In a swift response on October 4, China blocked Nexperia China and its subcontractors from exporting specified finished components and sub‑assemblies made in China.
• The Dutch Enterprise Chamber then suspended Nexperia Chief Executive Zhang Xuezheng on October 7 and installed Chief Financial Officer Stefan Tilger as interim chief executive.
• Tensions rose further when Nexperia’s Dongguan plant refused to comply with agreed payment terms, prompting Tilger on October 26 to halt wafer shipments from Europe to China, an action that would ultimately disrupt chip supply to many global automotive firms, including Honda Motor, Volkswagen, Ford Motors and General Motors.
• Relief only emerged after US President Donald Trump met with Chinese President Xi Jinping in South Korea on October 30. Trump agreed to delay the implementation of Washington’s new “penetrating sanction rules” by one year.
• The Netherlands reached an agreement with the Chinese authorities in meetings on November 18 and 19.

“The Dutch government is positive about the measures already taken by the Chinese authorities to ensure the supply of chips to Europe and the rest of the world,” Vincent Karremans, Minister ofEconomic Affairs in the Netherlands, said on November 19. ” This is seen as a show of good will.”

“In light of these developments, the Netherlands has considered it the right moment to take a constructive step by suspending the order under the Goods Availability Act, in close consultation with European and international partners,” he said. “The Netherlands has considered it the right moment to take a constructive step by suspending the order under the Goods Availability Act, in close consultation with European and international partners.”

Wingtech Technology said in a statement on November 20 that the Dutch government had lifted its special powers over Nexperia and allowed it to regain control of the chip-making unit, calling the decision a constructive step following weeks of intensive negotiations.

Supply chain fragility

The dispute has also laid bare the fragility of global automotive and industrial supply chains, which rely heavily on Chinese component flows.

Executives and policymakers across Europe and the United States are being urged to brace for a prolonged era of operational uncertainty as geopolitical risks increasingly drive procurement decisions and technology policy.

“China’s decision to de-escalate was likely motivated by a desire to avoid triggering an accelerated decoupling of its semiconductor supply chains as well as a global trade war,” Klaus Schmitz, a partner at Arthur D. Little, told Asia Times in an interview. He added:

This makes the Western response particularly significant. The ability of European and US players to demonstrate credible substitution and circumvention measures to a significant degree showed that dependency risks can be partly managed.

Going forward, Western companies will undoubtedly intensify efforts to de-risk their semiconductor supply chains. From an industry-wide perspective, this implies that additional production capacity outside China will need to be established, especially since Nexperia was among the top 3 to 5 global suppliers in its segment.

Schmitz added thatChina will probably counter these trends through competitive pricing, favorable contract terms and policy incentives to maintain its role in global chip manufacturing.

Jian Junbo, director of Fudan University’s Center for China–Europe Relations, told ThePaper.cn that the controversy surrounding Nexperia “remains far from fully resolved, with both sides still engaged in negotiations.”He added:

Beijing expects a full return to the original policy framework rather than a temporary pause, and the eventual impact on the industry will depend entirely on the agreement both sides ultimately reach. China’s stance is clear and unlikely to soften.

European capitals are increasingly applying a security‑led lens to their economic ties with China. The Netherlands, as well as the entire Europe, will view commercial engagement with China through heightened security considerations, a structural shift that is long‑term and likely to intensify.

Jian warned that the evolving posture in Europe underscores deeper structural tensions in China-European Union ties, suggesting that both sides will have to adjust their supply chain strategies if political risk continues to rise.

“The responsibility for the Nexperia issue lies squarely with the Dutch side,” Chinese Commerce Minister Wang Wentao told UK Secretary of State for Business and Trade Peter Kyle in a video call on November 20. He added:

China, acting from a position of responsibility, granted exemptions for qualified civilian‑use exports, which helped ease the crisis. The Dutch decision to suspend the order is a first step in the right direction.

We hope the Netherlands will truly assume its responsibilities and take concrete action as soon as possible. The Dutch side should facilitate a lawful, negotiated resolution of Nexperia’s internal disputes to help restore stability to a global semiconductor supply chain that remains fragile.

Yu Yongjie, a columnist at the Beijing Youth Daily, described the Nexperia saga as a modern “An‑Shi Rebellion,” noting that Nexperia’s Chinese name sounds similar to the surnames of two generals, An Lushan and Shi Siming, who led a major uprising in the eighth century CE but failed to overthrow the Tang Dynasty. He added:

The Netherlands thought that it could settle the issue by taking control of Nexperia’s headquarters and management, but it failed to grasp that 80% of Nexperia’s wafers need to be sent to Nexperia China for packaging and testing. European manufacturing is deeply bound to China, so every punch Europe throws ultimately lands on itself.

Many Western politicians impose sanctions on China without considering what countermeasures China might take, or which critical dependencies they themselves hold in China’s hands. When China retaliates, they suddenly find themselves in an awkward position and scramble to negotiate.

Yu admitted that Trump’s change of mind in sanction rules on October 30 also played a role in de-escalating the Nexperia issue. He urged the Dutch government tolearn a lesson from this incident.

Vulnerabilities

Schmitz said the mitigation strategies implemented by European original equipment manufacturers (OEMs) and suppliers proved largely effective, as they managed to avoid major short-term disruptions to production.However, he said, the Nexperia episode underscored vulnerabilities that extend far beyond the automotive sector.

“Virtually every modern industry, from manufacturing and chemicals to pharmaceuticals, telecoms, energy and healthcare, depends on a stable semiconductor supply,” he said.

He said the strategic importance of chips had once been clear after the 2020–2023 shortages amid the pandemic, but this incident made the risks tangible once again.”

“Supply disruptions are no longer driven only by natural or economic shocks,” he said. “Geopolitical power dynamics now shape access to critical components, and companies must build geopolitical resilience into long‑term sourcing and industrial strategies if they want to withstand the next crisis.”

Read: Chinese pundits claim victory after Trump’s trade concessions

Follow Jeff Pao on Twitter at@jeffpao3