Not only the Dutch chip machine maker ASML has found itself in a geopolitical battle. The traditionally Dutch Nexperia also suffers from a changing political climate. The company has been making the simplest chips for decades, but is facing problems now that it is in Chinese hands.
In Germany, Nexperia does not receive a subsidy for a project in a factory in Hamburg, in Wales it has to divest a factory under pressure from the British government and there is now uncertainty about the takeover of the Dutch chip start-up Nowi.
For years, Nexperia was part of chip maker NXP, which was once created within Philips. While NXP focuses on the production of more advanced sensors and chips, for example to make contactless payments with your phone, Nexperia focuses on ‘bulk’. The nuts and bolts under chips, as they say themselves: basically simple switches.
The company makes 100 billion a year. From telephones to vacuum cleaners, refrigerators, cars or the drill: they are in everything.
Energy from the environment
Nexperia had its eye on the Delft start-up Nowi. That company is making waves with the way it supplies its chips with energy. This is obtained from the environment, via vibrations, heat or light. Consider, for example, sensors in the road – Nowi’s chips allow them to generate energy through sunlight, so no batteries need to be replaced.
But Nexperia’s takeover of Nowi last year has attracted the attention of the government. Since June this year, there has been new legislation that gives the Minister of Economic Affairs the opportunity to impose certain conditions on a takeover or even to stop it in the context of national security.
The takeover of Nowi is one of the cases in which it is now being examined whether an extensive investigation should be conducted retroactively. When asked, a ministry spokesperson said that the decision-making process was still in progress. Nexperia hopes that clarity will emerge soon.
Think twice before doing business with a Chinese party.
“With the new law, the government is sending a clear message to the tech sector: ‘think twice before doing business with a Chinese party’,” says Maaike Okano-Heijmans, specialist in geopolitics and technology at the Clingendael Institute. Although the law covers more sectors than just technology and involves players from all countries, in practice there will be a lot of attention for the tech sector and Chinese companies will draw attention in advance.
The fact that the takeover of Nowi by Nexperia is now under a magnifying glass has everything to do with Nexperia’s parent company: Wingtech. That Chinese company acquired Nexperia in 2019. It’s hard to imagine that this would be as easy now, just a few years later.
In conversation with Bloomberg, outgoing Minister of Economic Affairs Adriaansens said just before the summer that China is one of the countries to which the Netherlands must be “extra alert” and that there is a chance that “sensitive technology” will be used for military purposes. “That knowledge must be protected.”
Bart Groothuis, VVD MEP, is more outspoken about this. He fears that Nowi’s technology could specifically end up in mini-drones that can carry out attacks independently. “This chip has potential military applications.”
Nexperia opposes this image. The manufacturer says it does not intend to develop the chips in the direction that MEP Groothuis fears. The company calls the technology “really not that earth-shattering” and not unique.
Peter Baltus, professor of electronics at TU Eindhoven, agrees. “At ASML the story is very clear: we have something unique in our hands and must prevent it from ending up in the wrong hands. But Nowi does not do something that is so unique.”
Baltus calls the scenario that the technology can be used in small drones not likely. That does not alter the fact that he can imagine that there are military applications for Nowi’s technology. “Think of war situations where you don’t want to have to replace batteries.” According to Nexperia, Nowi’s technology is not eligible for military use now or in the future.
Project in Germany
The fact that Nexperia is encountering problems shows how great the geopolitical tensions surrounding the theme are now. This is also clearly noticeable in Germany.
Nexperia wanted money from the government for an innovation project within the existing factory. This is possible in Germany as part of a special support program. But the Nexperia consortium was the only one to receive no financial support. According to the German business newspaper Handelsblatt, responsible minister Habeck thought it was wrong to provide a subsidy because of Nexperia’s Chinese parent company and the possible military applications of the chips.
All this to the frustration of Nexperia, which is now wondering out loud how much Europe still wants the company.
- Dutch-Chinese chip manufacturer must largely divest British factory