The Dutch government has taken control of Nexperia, a Chinese-owned chipmaker based in the Netherlands, in a bid to safeguard the European supply of semiconductors for cars and other electronic goods and protect Europe’s economic security.

The Hague said it took the decision due to “serious governance shortcomings” and to prevent the chips from becoming unavailable in an emergency.

Nexperia’s owner Wingtech said on Monday that it would take actions to protect its rights and would seek government support.

The development threatens to raise tensions between the European Union and China, which have increased in recent months over trade and Beijing’s relationship with Russia.

In December 2024, the US government placed Wingtech on its so-called “entity list”, identifying the company as a national security concern.

Under the regulations, US companies are barred from exporting American-made goods to businesses on the list unless they have special approval.

In the UK, Nexperia was forced to sell its silicon chip plant in Newport, after MPs and ministers expressed national security concerns. It currently owns a UK facility in Stockport.

The Dutch Economic Ministry said it made the “highly exceptional” decision to invoke the Goods Availability Act over “acute signals of serious governance shortcomings” within Nexperia.

“These signals posed a threat to the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities,” the ministry said in a statement.

“Losing these capabilities could pose a risk to Dutch and European economic security.”

The statement did not detail why it thought the firm’s operations were risky. A spokesperson for the minister of economic affairs told the BBC there was no further information to share.

The measures are aimed to keep European chip supplies flowing and protect Dutch intellectual property, said EU-China researcher Sacha Courtial.

In a crisis, a Chinese-owned company could come under pressure from Beijing to halt supplies or prioritise sales to China, crippling European industries like carmakers and electronics manufacturers, he said.

The Hague’s move puts economic security “over free-market investment principles”, in what could pave the way for other governments to follow, said Mr Courtial from the Jacques Delors Institute.

The Goods Availability Act is designed to allow the Hague to intervene in companies under exceptional circumstances. These include threats to the country’s economic security and to ensure the supply of critical goods.

Under the order, the Dutch Minister of Economic Affairs, Vincent Karremans, could reverse or block Nexperia’s decisions if they were potentially harmful to the company’s interests, to its future as a business in the Netherlands or Europe, or to ensure supply remains available in an emergency.

The Dutch government added the company’s production can continue as normal.

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

Shanghai-listed shares in Nexperia’s parent company Wingtech fell by 10% on Monday morning.

A Nexperia spokesperson said the company “complies with all existing laws and regulations, export controls and sanctions regimes,” and had no further comment.

In a statement in Mandarin, Wingtech said its operations were continuing uninterrupted and it remained in close communication with its suppliers and customers.

Wingtech said in a stock filing that the company’s chairman, Zhang Xuezheng, was suspended from Nexperia’s boards by an Amsterdam court order earlier this month.

The company was also in talks with lawyers about potential legal remedies, it added.

The BBC has also contacted the Chinese embassies in the Netherlands and Brussels.