The Dutch government’s decision on 30 September to impose a last-resort restraint order on China-owned Netherlands-based chipmaker Nexperia is more than a trade dispute. It’s the consequence of a belated realisation that technology competition with China is real. Economic security in open and liberal democracies, including Australia, demands foresight, not last-minute intervention.
The Dutch order, which prohibits Nexperia moving assets without government consent, was both necessary and overdue. Nexperia is one of the world’s largest producers of semiconductor components for automotive and consumer electronics.
In 2017, it was acquired by Chinese investors who sold it to Shanghai Wingtech in 2018. Now, court documents and media reporting have revealed that Nexperia’s chief executive, Zhang Xuezheng, had been preparing to transfer Europe-based intellectual property, production lines and know-how to China.
Three developments converged to create the crisis.
The first was China’s tech-industrial strategy. Wingtech, Nexperia’s parent company, was incubated as part of Beijing’s Little Giants program in 2021. This initiative supports thousands of companies contributing to China’s drive for high-tech self-reliance. Through this affiliation, Nexperia became part of President Xi Jinping’s ambition to make China the world’s dominant technology power.
The second was The Hague’s own complacency. The 2018 acquisition of Nexperia should have raised a red flag. That same year, global attitudes towards China began to harden. The Dutch intelligence service warned in that year that China posed ‘the greatest threat to the Netherlands’ economic security.’ It has repeated the warning annually since then.
The third was US policy to restrain Chinese access to advanced technologies. In 2024, US export control authorities placed Wingtech on a sanctions list. In September 2025, they designated Nexperia as an affiliated entity ‘aiding China’s efforts to acquire sensitive semiconductor manufacturing capabilities’.
After seven years of inaction, the Dutch government had to invoke a 1957 emergency law, never used before, as a last-ditch attempt to prevent the outflow of critical technology. There’s no guarantee of success. Beijing’s response was swift: its Ministry of Commerce imposed export bans on Nexperia’s Chinese fabrication plants, halting the shipment of essential components to Europe. It also placed the onus squarely on The Hague to ‘resolve the issue’. That triggered discord among European governments as Germany’s Volkswagen and BMW warned of a risk they’d need to halt production.
The Nexperia case underscores a hard truth: countries that welcomed Chinese investment into sectors now deemed critical to national security need to rethink their safeguards. Australia has identified 64 such technologies.
As the breadth and depth of China’s industrial strategy has become clearer, democracies need to adopt systemic and preventive approaches to economic security, as opposed to current reactive case-by-case interventions.
How can this be done?
Most countries already have foreign investment and acquisition review panels. These bodies typically rely on self-notification by affected entities. While this works in many cases, China’s deliberately opaque and diffuse tactics demand righter oversight and a re-examination of past deals.
Governments also should signal what ‘critical’ means in the context of critical technologies and explain the implications for foreign partnerships, acquisitions and investments. These assessments should also consider their effect on global competitiveness.
ASPI’s Critical Technology Tracker identifies 57 out of 64 areas where China holds a dominant global knowledge position, spanning defence, space, energy, advanced materials and key quantum technology areas. Allowing Beijing to further consolidate these sectors would undermine our collective strategic competitiveness.
Finally, authorities should confront China’s strategic economic and technological programs more strongly. Given the explicit goal of Little Giants to achieve technological self-sufficiency and create dependencies, companies in the program should be prohibited from gaining ownership, control or influence over critical technology assets. This would apply to more than 16,000 small and medium Chinese technology enterprises.
In semiconductors, Australia has a small but promising footprint. Companies such as Silanna and Morse Micro design world-class components. Silanna even operates Australia’s only chip fabrication facility, in Brisbane. Yet, these firms, too, depend on overseas supply chains and manufacturing plants.
Canberra has shown it can act when necessary, blocking the proposed sale of electricity distributor Ausgrid to Chinese bidders in 2016 and excluding Chinese suppliers from bidding for telecommunications network infrastructure in 2018. Reinforcement of the powers of the Foreign Investment Review Board in 2021, through the addition of a national security test, and 2024 amendments to the Security of Critical Infrastructure Act, allowing for ‘government assistance’ directions during crises, added further important safeguards. But such measures are reactive.
The Nexperia saga is not an isolated incident; it’s a symptom of a broader shift. The real economic security risk is the quiet erosion of access to essential, unglamorous parts that keep industries running. Economic security in open, market-oriented democracies requires an anticipatory approach grounded in foresight.
For Australia, the imperative is clear too: align investment screening, supply chain continuity and contingency planning with a deeper understanding of the direction of China’s techno-industrial complex. The Netherlands’ effort to defend its sovereignty has, paradoxically, exposed its dependence. Nexperia joins a growing list of examples showing liberal democracies have been too complacent in dealing with China.
