In this chip factory in Malaysia, Nexperia is trying to close the leak in China

The entrance to the Tuanku Jaafar Industrial Park looks like a hectic film set being converted for a new scene. Forklifts and trucks wheel large wooden crates back and forth among a tangle of people wearing white construction helmets and fluorescent vests. The contents: new chip machines, intended for Nexperia.

In the Malaysian city of Seremban, the chipmaker is trying to close the gaps that arose after the dramatic break with Chinese owner Wingtech. Nexperia makes more than 100 billion standard chips per year. You will find such small, simple components on every printed circuit board – modern cars contain hundreds of such semiconductors.

Nexperia, which emerged from Philips and NXP, was an inconspicuous chipmaker until Vincent Karremans, then Minister of Economic Affairs, suddenly put the company under strict control with an emergency law at the end of September 2025. Shortly afterwards, in early October, the Enterprise Chamber suspended CEO Zhang Xuezheng (Wing) after three fellow directors accused him of mismanagement. He would like to dismantle the organization in Europe to save his ailing Chinese activities. In response to Karremans’ measure, China blocked the export of Nexperia chips. Since then, the European branch and owner Wingtech have been publicly fighting for control.

The Nexperia factories that make the chips are in the United Kingdom and Germany. That’s frontend production. In China, Malaysia and the Philippines, these chips are then packaged in a plastic casing and tested (backend). This global production chain fell apart when the branch in the Chinese city of Dongguan declared independence from the European headquarters in October. In one fell swoop, Nexperia lost almost 70 percent of its backend capacity. There was an acute chip shortage among the largest customers, the car manufacturers.

Mass applications

The Malaysia factory must fill this gap by doubling production as quickly as possible. The drive for expansion in Seremban already starts at the gate. On a Thursday afternoon at the end of June, a group of applicants are waiting in a pungent smell of asphalt – the road around the business park is just being renovated. Today 49 people come by to sign a contract and start their training. The factory, which now employs 3,300 people, needs 1,000 extra employees.

“Mass applications are practical, it is more efficient to train groups at the same time,” says Harith Abdullah, director of Nexperia Malaysia. His office is adjacent to a room of hundreds cubiclessquare mini offices where the employees just stick their heads above the rest. “In September you will no longer recognize it here,” Abdullah promises. “The employees move to mobile offices further down the site, and this floor turns into one large cleanroom.” Nexperia wants to produce millions of chips per day in that dust-free space.

Seremban doubles its production capacity in a few months. “In my 27 years of service, this is the fastest ramp up that I have ever seen,” says quality manager Chitra Dhayanandhan. She already worked at Nexperia when the chip division was still part of Philips. Such an explosive expansion is “stressful,” Dhayanandhan admits, but according to her, not as bad as the stress of last year. Then the Malaysian factory had to make drastic cuts; CEO Wing wanted to be able to produce in Seremban as cheaply as in China. The Nexperia employees feared for their jobs, because a previously planned expansion didn’t get off the ground.

There was already a new building next to the factory in Seremban, ready for use, but the chip machines were missing. After Wing’s suspension, the hesitation has disappeared: a new footbridge connects both buildings and the machinery has been expanded. “We have purchased thousands of new machines,” says operations manager Ooi Thiam Seng – TS for colleagues – during a tour of brand new cleanrooms. By the end of this year, or early 2027 at the latest, Seremban will be able to process between 70 and 90 billion chips annually, approximately the same as Nexperia’s production in China. But competing chip makers are also expanding to gain market share, TS knows. “They want to take advantage of Nexperia’s situation.”

Robots and AI

The factory of competitor OnSemi is located two minutes away from Nexperia, and companies such as Texas Instruments and Intel have also been located here for decades and are growing rapidly. Malaysia is a popular place for the semiconductor sector. Geopolitically, the country tries to remain neutral; Neither China nor America dominates here. Hence the ASML supply chain settles in Malaysiato be able to produce cheaper than in the Netherlands.

The International Monetary Fund counts on it that the Malaysian economy will grow by 4.7 percent this year, thanks to demand for AI chips and data center equipment, such as servers and electrical power supplies. Such parts also require the type of chips that Nexperia produces. The AI ​​data centers are just the tip of the iceberg, thinks Harith Abdullah. According to him, the rise of ‘physical’ AI, such as industrial robots and humanoids, creates a completely new sales market. “Such robots are packed with sensors, motors and electronics, and they need a lot of our standard chips.”

Small miracle

The expansion of the factory in Seremban will cost Nexperia more than 300 million euros. This investment is financed, among other things, with a credit of 60 million euros from the Dutch state investor Invest International. The remainder will be financed with additional loans and Nexperia’s own resources.

The fact that this is possible is a minor miracle, according to Ruben Lichtenberg. Lichtenberg is director of legal affairs at Nexperia and one of the three board members who went to the Enterprise Chamber last year to accuse Wing of mismanagement. He explains the future plans at the Nexperia headquarters in Nijmegen.

“We were concerned in October last year about how this would go. We took into account that we would make a loss from March or April. But that did not happen. Because the market is good, and also because customers understand our situation.”

In the first quarter, Nexperia’s European branch achieved a turnover of 300 million euros. The second quarter shows “significant growth” and the upward trend appears to continue for the rest of the year. But the final turnover is still much less than the 2 billion before the break with the Chinese colleagues.

Lichtenberg: “We are trying to restore the production chain, but to be honest we are still having difficulty supplying all customers.” Nexperia itself does not supply wafers – disks with chips – to the factory in Dongguan. As an interim solution, some automakers purchase the wafers directly from the Nexperia factory in Hamburg. They take the discs themselves to the Chinese branch in Dongguan, which turns them into individual chips. In this way, the automaker prevents parts from changing and having to be recertified; a time-consuming and expensive process.

Growth plans

Nexperia’s customers will want to spread their risks across multiple chipmakers. At the same time, Nexperia must broaden its production chain. “Diversification is a global trend,” says Lichtenberg. “This crisis has taught us that we were very dependent on one region. We are now trying to compensate for that.”

The expansion in Malaysia is therefore a priority, but other Nexperia factories are also being renovated: Hamburg is in the process of modernization and the production of power chips is being scaled up in Manchester and the Philippines. In addition, Nexperia announced a collaboration with the American chip manufacturer Polar.

Growth plans are being made again at Nexperia’s head office. “We want to invest more than a billion euros in research and development over the next five or six years,” says Lichtenberg. But the battle for control of the company is far from over. The Enterprise Chamber appointed the Dutchman Guido Dierick as temporary director, pending the outcome of the investigation into possible mismanagement of Wing. But Wingtech is still the economic owner of the European company, although it lost legal control.

However, Wingtech is in danger of losing its listing on the Shanghai stock exchange at the end of this year because the accountant has insufficient information to complete the annual accounts. The share price is at a low point and financially the situation is difficult: Wingtech suffered last year 8.7 billion yuan loss (about one billion euros). The loss is expected to continue in the first half of the current year 400 to 600 million yuan amounts. But the Chinese Nexperia branch is considering one by the end of this year independent production chain have built up, separate from the European head office. Wingtech is trying to gain access to the Nexperia patents through a Chinese judge. This creates two Nexperias: one for China and one for the rest of the world.

Meanwhile, the Chinese parent company is suing the European subsidiary, including the three directors who went to the Enterprise Chamber. Wingtech demands damages of the equivalent of 1 billion euros. Lichtenberg does not want to comment on the legal proceedings. “Despite the animosity, we would like to on speaking terms come. We are open to any dialogue from the start,” he says.

A solution

Suspended CEO Zhang Xuezheng has so far not been forced to the negotiating table, and his whereabouts are unknown. The Chinese government hopes that Wingtech will negotiate. The diplomatic disagreement between the Netherlands and China that arose due to the Nexperia crisis appears to have been resolved after the Dutch trade mission to China this month, led by Minister Sjoerd Sjoerdsma (Foreign Trade, D66). The Dutch emergency law and the Chinese export restrictions for Nexperia had already been suspended – these are internal vicissitudes that still stand in the way of a solution.
In one NRC-interview Sjoerdsma said that Nexperia was a “huge hurdle” that China would like to put behind it: “Together we are trying to persuade the two parties in the company to find a solution.” Last week confirmed a spokesperson for the Chinese trade ministry Sjoerdsma’s conclusion.

It is unclear what that solution should look like. A split is obvious, perhaps a second stock exchange listing and financial compensation for Wingtech. This requires discussion first. If a deal is reached, Lichtenberg hopes that the Chinese chip factory can become part of the same group again. “We currently supply Chinese automakers from Malaysia. But we would like to integrate the factory in China into our production process again. That proposal is still on the table.”

Wouldn’t such a reunification result in a production surplus? Lichtenberg thinks this isn’t too bad. “Market developments are moving so quickly… We are now first focusing on the automotive industry, but our products are just as indispensable for AI and the energy transition. Apparently it takes a crisis to make it clear how important these standard chips are.”