The Dutch government has taken control of Chinese-owned chipmaker Nexperia in a move it described as “highly exceptional.”

The takeover occurred on September 30, but the government only made the decision public yesterday (October 12).

In a statement, the Dutch Ministry of Economic Affairs said it invoked the Goods Availability Act due to “serious governance shortcomings” at the company, adding that these failings “posed a threat to the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities.”

“This measure is intended to mitigate that risk,“ the statement said.

Based in the Netherlands, Nexperia has been wholly owned by China’s Wingtech since 2019. The chipmaker produces semiconductors for use in the European automotive industry and consumer electronics, a process which the government said will continue as normal, despite the takeover.

According to a corporate filing by Nexperia with the Shanghai Stock Exchange, the company confirmed the move and noted that Wingtech chairman Zhang Xuezheng had been immediately suspended from his roles as executive director of Nexperia Holdings and non-executive director of Nexperia Semiconductor. The filing also said the company must also refrain from making any adjustments to its assets, intellectual property, operations, or personnel during the following 12 months.

Per a post from Chinese policy blog Pekingnology, in a now-deleted WeChat post, Nexperia issued its own statement, in which it said the “Dutch government’s decision to freeze Nexperia’s global operations under the pretext of ‘national security’ constitutes excessive intervention driven by geopolitical bias, rather than a fact-based risk assessment.”

It went on to add: “Since Wingtech Technology’s acquisition of Nexperia, the company has strictly abided by the laws and regulations of all jurisdictions where it operates, maintaining transparent operations and sound governance.”

This is not the first time Wingtech has dealt with government scrutiny in Europe. Following a lengthy security review, in November 2022, the UK government blocked the sale of the Newport Wafer Fab to Nexperia.

The chipmaker had originally acquired the fab for £63 million ($75m) in July 2021, but following backlash after the closure of the deal, a “full national security assessment” was launched. This resulted in Nexperia being forced to sell its 86 percent stake in the factory due to concerns that China could undermine the country’s semiconductor production capabilities.

The plant was eventually bought by Vishay, a US electronics company, in November 2023 for a reported £142 million ($177m).