Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Turns out you can close the stable door once the horse has bolted — and recapture the flighty equine too. The Dutch government has seized control of Nexperia, the domestic chipmaker acquired by China’s Wingtech in 2019, citing risks to Europe’s economic security.
It is unclear how, exactly, the Dutch government will use its new powers; economy minister Vincent Karremans can now block or reverse decisions taken by Nexperia’s board. That could presumably include Wingtech’s recent sale of assembly assets to Luxshare Precision. The precise nature of the “serious governance shortcomings” alleged by the Dutch government is also unclear.
Yet this rather radical step is clearly an escalation of an existing trend. Deals have been unwound before. Indeed, in 2022 Britain ordered Nexperia itself to divest Newport Wafer Fab, a Welsh plant, having previously waved through the deal. And in 2019 US regulators ordered Beijing’s Kunlun to sell its 60 per cent stake in Grindr, three years after the Chinese gaming company first invested in the gay dating app.
Chances are that clawbacks of some description will become more commonplace. National security is a growing concern. Over the past fortnight, China and the US — the dominant tech players — between them announced four tit-for-tat measures designed to curb each other’s access to critical technologies and materials. In this context, nations see sovereignty over tech knowledge, chip production and data storage as part and parcel of national security.
Some specifics apply to Nexperia and owner Wingtech. The acquisition was to have seen Nexperia run independently but chief executive Frans Scheper departed within months of the deal going through, and Wingtech founder Zhang Xuezheng swiftly assumed his seat.
Moreover, last December Wingtech was placed on the US Entity List, a blacklist that restricts companies’ access to US technologies unless they have a specific export licence. The US recently extended those controls to affiliates of blacklisted names, a grouping that includes Nexperia. As licence requests are often denied, it can starve those on the list of technology and materials.
If growing tensions cause more done deals to unravel, that would have interesting consequences for M&A negotiations. Alongside big termination fees, sellers often demand higher prices to engage with buyers that risk a pre-emptive antitrust block. Now, future international buyers may demand discounts to at least partially compensate them for the risk of forced divestments or seizures.
This, of course, is likely to be a bigger issue in the US and China: Europe is a distant third player in terms of chip manufacturers and data centre providers, all key props for AI. That gives rise to a different sort of problem for governments interested in tech sovereignty. The Dutch have acted to prevent leakage of intellectual property and potentially chip supplies. Europe’s bigger task is to foster more of these things on home soil.
Source link
