Dutch government takeover of chip manufacturer underlines importance of protective security and organisational resilience
The Dutch government’s takeover of Chinese-owned chip manufacturer Nexperia has drawn attention to the increased willingness of Western governments to intervene in commercial relationships on national security grounds.
Disruption to Nexperia’s chip production threatens serious disruption to global automobile manufacturing, underlining the need for organisations to be resilient to geopolitically driven supply chain shocks.
The case has been widely reported [LINK]; a timeline of key events can be found below. This brief focuses on our assessment of the key implications of the Nexperia case and provides recommendations for organisations.
SECURED is a security consultancy specialising in providing protective security for research and innovation entities of national security significance.
Arrange a rapid review of your organisation’s security posture now.
Implications
Strong protective security governance is crucial for foreign-owned organisations amid enhanced geopolitical competition. The Nexperia case shows that security governance is a key consideration for Western authorities when contemplating intervention on national security grounds.
Sections 2.7-2.20 of the Dutch court ruling [LINK] show that the authorities were pushing Nexperia to adopt a set of protective security arrangements, including effective controls on cyber security and insider threats and transparency around governance. Resistance from then Nexperia CEO Zhang Xuezheng to implementing these measures contributed to the Dutch authorities’ intervention.
The Ministry of Economic Affairs had emphasised the importance of operational independence, effective security governance, and policies addressing cyber security and insider threats [LINK].
The Ministry informed Nexperia that US authorities would look for clear evidence of “mitigation measures to limit the transfer of US IP, technology, knowledge and capabilities” [LINK].
It is highly likely that future Chinese-origin investment into European chip manufacturers will face intense government scrutiny on national security grounds. For manufacturers this will remove a key potential source of investment and increase the likelihood of companies turning to national governments for financial support. European manufacturers owned by Chinese interests, such as Plessey Semiconductors and Imagination Technologies, are likely to come under renewed scrutiny from national governments. Investors will likely look for a risk premium on transactions involving such entities.
The Nexperia case underscores the growth of geopolitical risk as a driver of supply chain disruption. The conflict over Nexperia has disrupted chip production and packaging, prompting growing concern among German and Japanese automotive manufacturers [LINK, LINK]. Geopolitical conflict and competition is increasingly disruptive to a broad range of industries and sectors.
Recommendations
Organisations should demonstrate strong protective security posture to mitigate the risk of costly government intervention. Organisations operating in sensitive sectors of the economy should retain external experts to assess their protective security posture. The ability to demonstrate effective and proportionate internal security controls will be a key requirement in passing regulatory requirements under national security legislation.
Organisations with operations in countries at elevated geopolitical risk should strengthen internal controls on information and technology transfer to prevent IP theft. For many companies, the question will not be whether to operate with overseas facilities, but how to do so securely. We recommend adopting a layered approach to cyber security and insider threat programmes, but also to governance and organisational structure. Organisational structures should be designed to fail securely in the event of major internal ructions along geographic boundaries.
Organisations should adopt a risk-based approach to supply chain security to ensure resilience. In a complex and dynamic risk environment it is impractical to expect organisations to identify and forestall all risk events. Organisations should adopt a risk-based approach centred on the identification of business-critical organisational dependencies, rather than assuming the ability to forecast disruption across complex and globalised supply chains.
Organisations should develop resilience through exercising. Conducting senior-level tabletop exercises to explore responses to geopolitical disruption of critical suppliers is a positive first step and will help develop organisational muscle memory. Organisations should move towards a regular programme of assurance activities, including exercising for a range of scenarios at different levels of the organisation.
Timeline of Events
30 September 2025
The Dutch Minister of Economic Affairs invoked the 1952 Goods Availability Act, citing “serious governance shortcomings” at Nexperia [LINK].
1 October
Nexperia executives filed a claim in the Dutch courts requesting an investigation and the imposition of interim controls.
4 October
The Chinese Ministry of Commerce issued an export control notice, preventing Nexperia from exporting chips from China [LINK, LINK].
13 October
Nexperia owner Wingtech responded on its WeChat account, accusing the Dutch government of ‘geopolitical bias’ and indicating it would pursue the case in the courts.
14 October
Nexperia released a statement covering the removal of Nexperia’s Chinese CEO and the Dutch government’s intervention under the Goods Availability Act [LINK].
18 October
The South China Morning Post reported that Nexperia had shut Chinese employees out of work accounts and halted their salaries [LINK].
19 October
Nexperia’s Chinese unit told staff to disregard instructions from the company leadership in The Netherlands [LINK].
20 October
Nexperia’s Chinese unit claimed in a WeChat post to be an independent company.
22 October
Nexperia reportedly disavowed chips produced in the company’s Chinese manufacturing sites, stating that it could no longer guarantee production at those factories [LINK].
23 October
Nexperia’s Chinese business unit posted a statement on WeChat accusing the Dutch headquarters of spreading “information [...] that is inconsistent with the facts” and disregarding the rights of “Nexperia China entities” [LINK, LINK].
Reuters reported that Nexperia’s Chinese unit had resumed deliveries to domestic distributors, with transactions now being conducted in yuan [LINK].
An article on China’s English-language Global Times website used the formulations ‘Nexperia Netherlands’ and ‘Nexperia China’ when referring to the company.
