Dutch court hears arguments in Nexperia mismanagement case that upset the global auto industry

THE HAGUE, Netherlands (AP) — Lawyers for Dutch-based semiconductor maker Nexperia and its Chinese owners faced off in an Amsterdam courtroom Wednesday in a corporate mismanagement case that has sent shock waves through the global auto manufacturing industry.

The hearing at the enterprise chamber of the Amsterdam Court of Appeal was called to decide if the judges should launch an investigation into alleged mismanagement at Nexperia. No immediate decision was expected.

The power struggle at Nexperia emerged in the public spotlight in October, after the Dutch government said it had effectively seized control of the company since late September based on national security concerns. Its Chinese CEO Zhang Xuezheng, who’s also founder of Nexperia owner Wingtech, was replaced following claims of mismanagement and fears of intellectual property rights being transferred.

Lawyers for Zhang and Wingtech painted him as a successful businessman trying to guide Nexperia through troubled geopolitical waters. They urged the court not to order an investigation and said Wingtech had been blindsided by the Dutch government move. Zhang was not in court for the hearing.

Nexperia lawyer Jeroen van der Schriek told the three-judge panel that the behavior of Wingtech and Hong Kong-based holding company Yuching since October “makes it clear that they are willing to subordinate Nexperia’s interests to other interests.”

As tensions escalated, Beijing temporarily blocked the export of Nexperia chips from its plant in China in October, sending global auto manufacturers scrambling to secure supplies and alternatives. Nexperia’s chips are used widely by carmakers including those in North America, Japan and South Korea, according to analysts.

Beijing’s export ban was later lifted, after U.S. President Donald Trump met with Chinese leader Xi Jinping in late October. And the Dutch government in November said it was relinquishing its control of Nexperia as a “show of goodwill.”

But a standoff between Nexperia’s headquarters in the Netherlands and its Chinese unit continued to fuel chip supply chain concerns. Nexperia’s Chinese arm had said its Dutch headquarters interrupted shipments of wafers to its Chinese factory, which it said had impacted its core production operations and weighed on its ability in delivering finished products. Nexperia’s headquarters hit back, and said the Chinese unit had ignored instructions from the head office.

Car manufacturers including Honda had to halt production of some cars as the Nexperia crisis unfolded, and Mercedes-Benz was among those scrambling to find alternatives.

China’s Ministry of Commerce in late December demanded the Netherlands immediately take steps and correct its “mistakes," as it blamed the Dutch for causing a global chip supply chain crisis.

Nexperia was spun off from Philips Semiconductors two decades ago and then purchased in 2018 by Wingtech. In 2023, the British government blocked Nexperia’s bid to acquire Wales-based chipmaker Newport Wafer Fab, citing national security risks. ____

AP Business Writer Chan Ho-him in Hong Kong contributed to this report.