Europe invokes 1952 law to regain control of chip maker from China
Europe is entering a new phase in its quest for technological sovereignty, igniting a significant shift in the balance of power within the semiconductor industry. With increasing concerns over dependence on foreign entities, particularly China, the Dutch government has taken a bold step forward. By invoking a law from 1952, the government aims to regain control over Nexperia, a semiconductor manufacturer that was sold to Chinese ownership in 2017. This maneuver not only highlights the urgency of the situation but also reflects a larger trend of industrial sovereignty across the European Union.
The challenges faced by Europe in the tech sector—such as the setbacks with Intel, reliance on U.S. and Taiwanese markets, and China's aggressive tech ambitions—have culminated in a push for greater self-sufficiency. The European Commission, led by Ursula von der Leyen, has urged member states to take decisive action, signaling a clear message: Europe will not allow China to control strategic assets within its borders.
Europe targets Nexperia: reclaiming control from Chinese ownership
Nexperia, which was originally a division of NXP, was sold to a Chinese consortium for a staggering $2.75 billion in 2017. Two years later, it came under the control of Wingtech, a partially state-owned company listed in Shanghai, which is also on the U.S. Entity List due to its ties with the Chinese military. Since then, various concerns have emerged regarding Nexperia's operations and their implications for Europe's technological independence.
The Dutch government has justified its intervention by emphasizing that the company was not cooperating adequately, potentially jeopardizing Europe's access to critical technology. By invoking the Goods Availability Act, originally designed to secure essential goods in post-World War II Europe, the Netherlands aims to block or reverse any decisions from Nexperia's board that could affect its production capabilities.
While daily operations at Nexperia's plants won't be halted, the government will closely monitor all decisions. This shift in control is a significant step towards ensuring that European interests remain at the forefront of tech production.
Historical context: A long-standing tension in the semiconductor industry
The recent move by the Dutch government is not an isolated incident; it reflects a history of complex interactions between Europe and China regarding critical technology. In 2022, Nexperia attempted to acquire the Newport Wafer Fab in the UK, but the British government blocked the deal over national security concerns. Eventually, the facility was sold to U.S.-based Vishay in 2024. In Germany, Nexperia was denied public funding for similar reasons, highlighting the growing apprehension towards Chinese ownership.
- Nexperia's factories in Hamburg and Manchester produce essential chips for automotive and consumer electronics.
- These chips operate on mature nodes of 150 and 180 nanometers using 200 mm wafers.
- While not cutting-edge, these components are vital for Europe's supply chain, and their loss could exacerbate dependence on Asia.
Wingtech has criticized the Dutch intervention as politically motivated, resulting in a 10% drop in its stock prices in Shanghai. Chinese officials view this as an intrusion into their business interests, and the situation is being closely monitored across Europe. Many capitals are watching to see if this will mark the beginning of a broader policy to safeguard strategic assets.
Implications for Europe's technological sovereignty
This incident underscores a crucial realization within Europe: achieving technological independence requires tangible actions rather than mere rhetoric. The continent has been slow to respond to the growing influence of Chinese companies, which have made significant inroads into European markets over the past decade.
China's investments in European infrastructure, including partial ownership of critical ports, have raised alarms about national security and economic control. The recent developments in the semiconductor sector serve as a wake-up call, illustrating the need for a coordinated European strategy that prioritizes the defense of its technological interests.
Strategic assets and the role of international diplomacy
As the global landscape shifts, Europe must navigate its relationships with both the U.S. and China carefully. The semiconductor industry is not just about chips; it encompasses a range of technologies crucial for future economic dominance, including artificial intelligence and advanced manufacturing.
- The U.S. has emphasized the importance of semiconductor production for national security, pushing its allies to take similar stances.
- China's ambitions in tech have led to increased scrutiny of its investments in Europe.
- Europe's response will require a balance between fostering innovation and protecting its interests.
The recent tensions highlight the complex interplay between economic cooperation and national security. As Europe strengthens its defenses against external pressures, it must also ensure that it fosters an environment conducive to technological advancement and innovation.
Future prospects for the semiconductor industry in Europe
As Europe moves forward with its intervention in Nexperia, the future of the semiconductor industry remains uncertain. The region faces significant challenges, including:
- Establishing a comprehensive policy framework to support domestic semiconductor production.
- Attracting investment and talent to compete with established markets like the U.S. and Asia.
- Enhancing collaboration among EU member states to share resources and expertise.
Moreover, Europe must learn from past mistakes, particularly regarding its reliance on external entities for critical technology. The Nexperia case serves as a pivotal moment for the EU to reassess its strategy and prioritize local production capabilities.
In light of recent developments, the European Commission is likely to accelerate its efforts to create a unified semiconductor strategy, potentially drawing on insights from successful initiatives in other regions. This could involve establishing partnerships with private companies and investing in research and development to foster innovation.
As Europe grapples with these challenges, it is essential to remain vigilant and proactive in securing its technological future. The lessons learned from the Nexperia situation will undoubtedly shape the trajectory of the continent's semiconductor ambitions, setting a precedent for how Europe navigates its role in the global tech landscape.
For those interested in a deeper understanding of the geopolitical implications of semiconductor production, this video provides an insightful overview of the stakes involved:
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