Nexperia’s China unit has openly rejected an order from its Dutch headquarters in Nijmegen, dismissing John Chang as its vice-president of global sales and marketing. According to the South China Morning Post, such a move would have violated local company and labor laws, rendering the directive unenforceable under Chinese labor law, according to the company. This announcement shows how Nexperia China, which is only a subsidiary of the Europe-based company, is vying for control of the chip maker.
The issue began in early October, when the Dutch government seized control of Nexperia from Wingtech, its Chinese owner, citing the Goods Availability Act, which allows it to block attempts to move crucial technical knowledge and capabilities outside of Dutch and European soil. What makes this such an earth-shaking move is that this is the first time that the law has been used since it was enacted in 1952 during the height of the Cold War. Although the primary catalyst behind the takeover was the alleged $200 million misappropriation by the CEO of company assets, the ongoing trade war between the U.S. and China has certainly added more geopolitical pressure to the drama.
John Chang has been with the company for over two decades now. He started his career at NXP Semiconductors, its former parent company, until he transferred to Nexperia when it was spun off in 2017. Wingtech then acquired Nexperia in 2019, where it stands today. Nexperia hasn’t given any reason for Chang’s ouster as VP, which is probably why the Chinese subsidiary has refused to recognize this order.
Nexperia has fabs all over the globe, including Germany, the U.K., the Philippines, Malaysia, and China; however, China has the largest output among its subsidiaries, accounting for 70% of the company’s global output. This makes it economically powerful, with the subsidiary able to defy orders coming from its headquarters. Global geopolitics has also raised its head, with Beijing getting into the fray by blocking chip exports coming from its Guangdong site.
Even though both parties declare that the business is running as usual, many of its clients are looking for substitutes. It’s expected that only 30% of the company’s output is available to the global market, with the rest seemingly trapped in China until the situation is resolved. In fact, Bloomberg reports that Valeo SE, one of its clients and a major component supplier to Volkswagen, BMW, and Stellantis, has already found substitutes for 95% of the chips that it needs. Earlier this week, it was reported that Nexperia's ongoing shenanigans could have knock-on effects for automotive production in Japan, too.
This isn’t the first time that a European HQ and its Chinese subsidiary have been at loggerheads when it comes to decisions. Back in 2022, Allen Wu, the CEO of Arm’s China subsidiary, announced a plan to have an IPO independent of its parent company, which eventually resulted in his replacement. However, the difference this time is that Wu acted in defiance of his company’s board, whereas the story behind Nexperia isn’t quite as clear yet. Furthermore, there was limited to no government intervention during that episode, but now we have both The Hague and Beijing taking steps to protect their respective interests.
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