A Dutch court on Wednesday ordered a formal investigation into chipmaker Nexperia BV and upheld an earlier order suspending its Chinese chief executive officer Zhang Xuezheng (張學政), citing doubts about the company’s policies and conduct.
The written decision by the Enterprise Chamber of the Amsterdam Court of Appeal is the latest step in a saga swirling around the Dutch-based semiconductor company that sent shock waves through the global auto industry.
Nexperia makes the basic, standardized chips that are essential for controlling numerous automotive functions, such as operating headlights, airbag systems or anti-lock brakes.
Photo: Reuters
The dispute made world headlines last year when the Dutch government said it took the extraordinary step of effectively seizing control of the company. It acted on fears that corporate governance concerns at the company, under its Chinese ownership, would result in the loss of technological capabilities vital to Dutch and European economic security.
The dispute also highlighted how Europe is caught between the US and China in their global battle over trade and technology dominance. US officials had told the Dutch government Zhang should be replaced to avoid trade restrictions, a court filing last year showed.
Zhang, who is also founder of Nexperia’s Chinese parent Wingtech Technology Co (聞泰科技), was suspended by the enterprise chamber in October last year following claims of mismanagement.
Wingtech in a statement said that it “regrets that the Court has not fully restored our shareholder rights by its decision, and instead kept previous extraordinary interim measures in place pending further inquiry.”
At a court hearing last month, 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.
However, Nexperia lawyer Jeroen van der Schriek told the three-judge panel that the behavior of Wingtech and Hong Kong-based holding company Yuching Holding Ltd (裕成控股) since October last year “makes it clear that they are willing to subordinate Nexperia’s interests to other interests.”
An English statement issued by the court on Wednesday’s ruling said the chamber found that “a conflict of interest has been handled without due care” at Nexperia.
It added that there are “indications that the director of Nexperia changed the strategy without internal consultation under the threat of upcoming sanctions.”
It said that agreements with the Dutch Ministry of Economic Affairs “were no longer adhered to, the powers of European managers were restricted and their dismissal was announced.”
The court statement said that it could not definitively say how long the investigation would take, but added that such probes can take more than six months.
The court would use the findings to assess “whether there has been mismanagement at Nexperia and whether definitive measures need to be taken,” it said.
Nexperia in a statement posted online said that it “welcomes and respects” the ruling, and is “committed to fully complying” with the investigation.
Wingtech said it is confident that “a full, fair and impartial inquiry” would show its actions were “appropriate and in the best interests of the company and its stakeholders.”
It bemoaned the decision to continue Zhang’s suspension, saying that it prolongs “significant uncertainty.”
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