On May 22, an announcement by China’s Wingtech Technology and its subsidiary Yucheng Holdings drew widespread attention in China’s capital markets. The companies said they had filed a lawsuit with the Intermediate People’s Court in Dongguan, Guangdong, against Nexperia, its holding company, related entities and three foreign executives, seeking damages provisionally estimated at 8 billion yuan ($1.1 billion).
The lawsuit marks a dramatic escalation in a nearly eight-month battle over control of Nexperia and has been described as one of the largest overseas legal actions ever undertaken by a Chinese semiconductor company. Yet its significance extends well beyond the fate of one company. The dispute illustrates a broader transformation in the geopolitical risks confronting Chinese companies operating in Europe and the United States.
Since Donald Trump returned to the White House, transatlantic relations have become increasingly fractious. Washington and European capitals disagree on trade, defense and a range of economic issues. But on the question of economic competition with China, their policy trajectories have shown a striking degree of convergence. Both sides are reassessing their dependence on Chinese supply chains, expanding the concept of economic security and developing new legal and regulatory tools to constrain Chinese investment and trade.
For Chinese companies venturing into Western markets, the Nexperia dispute therefore deserves to be viewed not simply as a corporate controversy, but as a warning about the changing rules of the game.
Wingtech acquired Nexperia for more than 30 billion yuan ($4.13 billion) in 2019. At the time one of the largest overseas acquisitions in China’s semiconductor industry. Nexperia, a major producer of automotive-grade power semiconductors, accounted for a substantial share of Wingtech’s profits. The acquisition initially appeared to be a textbook example of Chinese capital gaining access to advanced global manufacturing capabilities.
That calculation changed dramatically in 2025. In late September, the US Commerce Department invoked its so-called “50 percent ownership rule,” bringing Nexperia within the scope of US export restrictions because of its ownership by Wingtech, which had already been placed on the US Entity List. The following day, the Dutch government froze Nexperia’s global assets under the 1952 Goods Availability Act, a rarely used piece of legislation. The Amsterdam Court of Appeal’s Enterprise Chamber subsequently suspended Wingtech founder Zhang Xuezheng from his positions at Nexperia and placed Wingtech’s 99 percent stake under third-party administration.
In legal terms, the Chinese parent company was effectively deprived of control over its core overseas asset. The consequences have also reached Wingtech’s financial reporting. Because auditors could not obtain financial data and IT records from restricted overseas entities, Wingtech’s 2025 annual report and internal-control audit received “disclaimer of opinion” conclusions, exposing the company to severe delisting risks under Chinese stock-market rules.
What makes the episode particularly significant is the broader policy environment in which it has unfolded.
Western governments have increasingly focused on what analysts describe as “China Shock 2.0”: the possibility that China’s industrial policies and enormous manufacturing capacity could create bottlenecks in strategic value chains. Since 2024, think tanks and policymakers in the US and Europe have paid growing attention to China’s position in sectors such as semiconductors, electric vehicles, batteries and renewable energy. The concern is no longer simply that Chinese products may outcompete Western producers, but that Chinese companies could acquire influence over critical nodes of global supply chains.
European Commission President Ursula von der Leyen has explicitly warned that Europe needs to protect itself against a new China shock, including through tariffs and other defensive measures. Against this backdrop, a semiconductor company that might once have been viewed primarily through a commercial lens can increasingly be treated as a strategic asset.
A second shift is equally important: economic security is becoming a whole-of-society project. Governments are seeking closer cooperation with private companies, monitoring corporate investment portfolios and encouraging businesses to conduct much more extensive due diligence on foreign partners. Private companies are no longer simply participants in international commerce; they are increasingly expected to serve as instruments of national economic-security policy.
The third development is the growing use of law as an instrument of economic competition. Britain has adopted legislation to intervene in strategic industrial assets; the Netherlands revived a decades-old law to intervene in Nexperia; France has imposed significant penalties on Chinese e-commerce platforms; and European authorities have launched regulatory investigations affecting Chinese investment in overseas mining assets. The common feature is not necessarily that every measure is politically coordinated, but that national-security and economic interests are increasingly being pursued through legal and administrative mechanisms.
Wingtech’s response has consequently taken three tracks.
The first is litigation in China. The company and Yucheng have invoked China’s Anti-Foreign Sanctions Law, arguing that measures imposed by the Dutch authorities constitute discriminatory restrictions and seeking confirmation of their illegality, an order to cease the alleged infringement and compensation of approximately 8 billion yuan.
The second is international investment arbitration. Wingtech reportedly submitted a notice of dispute to the Netherlands in October 2025 under the 2001 China-Netherlands bilateral investment treaty, beginning the process that could lead to arbitration. The treaty is relatively concise and contains fewer explicit national-security exceptions than many newer investment agreements. That may give Chinese investors potentially useful treaty protections, although the eventual legal outcome will depend on the specific claims and the tribunal’s interpretation of the agreement.
The third is supply-chain localization. In China, Nexperia has accelerated efforts to establish domestic supply chains for products including MOSFETs and logic ICs, with further product lines reportedly targeted for localization. This is more than a business-continuity measure. It provides a degree of strategic insurance in a prolonged dispute over overseas assets.
A Chinese court victory, however, would not automatically translate into compensation. If defendants hold executable assets in China, enforcement may be relatively straightforward. If their principal assets are overseas, recognition and enforcement of a Chinese judgment could become considerably more complicated. The litigation may therefore prove valuable even if immediate financial recovery remains uncertain: it can establish facts, clarify legal responsibility and strengthen China’s position in subsequent negotiations, arbitration or asset-related proceedings.
For Chinese companies investing abroad, the central lesson is that commercial due diligence is no longer sufficient. Political and legal risk must be incorporated into the investment decision from the beginning.
Companies should develop a much deeper understanding of the legal systems of their target markets, particularly in sectors regarded as strategically sensitive. They need databases tracking sanctions, investment-screening regimes, national-security legislation and regulatory changes, as well as teams capable of handling international investment law and sanctions disputes.
They should also establish permanent geopolitical risk-monitoring mechanisms rather than responding only after a crisis erupts. Investment structures, governance arrangements, intellectual-property ownership and supply chains should all be designed with the possibility of political intervention in mind. In sensitive industries, genuine localization and diversified management structures may reduce the vulnerability of an overseas operation to political pressure.
Existing international legal instruments should also be used more strategically. The Nexperia case demonstrates that older bilateral investment treaties can sometimes offer protections that newer agreements, with their more extensive national-security exceptions, do not. For Chinese companies, treaty selection and investment structuring should therefore be considered before an acquisition is completed, not after a dispute begins.
Finally, Europe’s internal diversity should not be underestimated. European countries have different industrial interests and different assessments of the risks posed by China. Some governments and European industries remain concerned that excessive restrictions could undermine their own competitiveness. Chinese companies and policymakers should therefore engage not only with national governments and EU institutions, but also with industry associations, major European businesses and other stakeholders that have a direct interest in maintaining commercial ties with China.
The Nexperia dispute is far from over. On May 27, Wingtech reiterated that it would exhaust every available legal avenue to restore full control of the company. The battle will continue in courts, arbitration proceedings, boardrooms and, potentially, diplomatic channels.
Whatever the ultimate outcome, the case has already changed the risk calculus for Chinese companies going abroad. Cross-border acquisitions in an era of geopolitical competition are no longer merely transactions designed to obtain technology, markets and profits. They can become contests over jurisdiction, regulation, supply chains and political power.
For Chinese companies, the challenge is no longer simply how to invest overseas successfully. It is how to preserve legal leverage, operational resilience and strategic autonomy when the commercial rules themselves are increasingly shaped by geopolitics.
Source: rfi, stcn, dacheng, guancha, sohu, nbd, cgtn
