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The recent developments surrounding the Dutch chipmaker Nexperia have raised significant concerns within the Chinese investment community. Following the Dutch government’s decision to take management control of Nexperia from its Chinese owner, Wingtech Technology, investors in China are now assessing the potential risks associated with their companies’ operations in Europe.
Investor inquiries intensify
At least seven publicly traded firms on the Shanghai and Shenzhen exchanges have encountered a surge of inquiries from investors regarding the implications of their European ventures. This increased scrutiny follows escalating tensions between China and the Netherlands, primarily sparked by the Dutch authorities’ takeover of Nexperia, which was framed as a matter of national security.
Concerns over national security
The Dutch government’s intervention resulted in the removal of Nexperia’s CEO, Zhang Xuezheng, raising alarms among investors. In response, Beijing has imposed restrictions on Nexperia’s operations within China, preventing its local units from exporting products.
This intensifying conflict has fostered an atmosphere of mistrust, compelling investors to reevaluate their investments in companies with significant exposure to European markets.
Impact on Chinese firms
The repercussions of the Nexperia situation have started to affect stock prices. Shares of Wingtech have dropped by approximately 12% this month, indicating growing concerns among investors.
Furthermore, companies seeking to acquire technological assets in Europe now face heightened scrutiny from stakeholders wary of potential complications arising from geopolitical tensions.
Investor concerns regarding acquisitions
Investor vigilance has increased in recent months, particularly concerning acquisitions in the semiconductor sector.
A notable case involves China Wafer Level CSP (WLCSP), a Suzhou-based chipmaker that acquired the Dutch optical component company Anteryon in 2019. Investors have recently raised questions about whether Anteryon could face risks similar to those experienced by Nexperia, a situation influenced by the Dutch government’s actions against foreign investments.
Response from Nexperia China
In an unexpected development, Nexperia’s operations in China, which function independently, have instructed employees to ignore directives from the Dutch headquarters. A letter circulated among staff stated that Nexperia China identifies as an autonomous entity and encouraged adherence to local management’s directives.
Local management’s stance
A letter made public via social media has asserted that employees of Nexperia China must reject any external directives that conflict with local orders. The communication emphasized that employee salaries are issued by the local entity, reinforcing its operational independence. This stance from Nexperia China highlights the rising tensions within the company and reflects the broader implications of ongoing geopolitical conflicts.
The developments surrounding this situation extend beyond Nexperia itself. The actions of the Dutch government serve as a warning to Chinese investors, urging them to reassess the security of their investments in European markets amid increasing geopolitical tensions.
The developments at Nexperia highlight a growing concern regarding international business relationships, especially in technology sectors deemed essential to national interests. Future actions of this nature may significantly alter the landscape of foreign investment and partnerships. This situation compels companies to adopt a more cautious strategy moving forward.
