Legacy Nodes at the New Geopolitical Centre

Legacy semiconductors have quietly moved from the periphery of global technology politics to their centre. These older process nodes (typically 28 nm and above) underpin microcontroller units, power-management and analogue ICs, sensors, and countless components essential to automobiles, industrial equipment, energy systems, and defence electronics. For much of the past decade, governments focused overwhelmingly on advanced nodes and AI-enabling chips, assuming that older technologies carried limited strategic weight. The confrontation surrounding Nexperia has upended that assumption. It has laid bare how China’s sustained investment in mature-node manufacturing has created a form of structural leverage that Western policymakers long underestimated.

From Routine Investment to Security Flashpoint

The Nexperia episode unfolded at a moment when the weaponisation of supply-chain interdependence was widening in both scale and scope. When China’s Wingtech acquired Nexperia in 2018, the deal was treated as a relatively low-risk case of Chinese expansion into the European semiconductor market. Mature chips were not seen as a security concern, and Europe’s regulatory frameworks reflected that complacency. But by 2023 and 2024 Washington was signalling to its Dutch counterparts that Chinese ownership of legacy-node capacity posed strategic risks, pushing Nexperia into a more politicised space traditionally occupied by advanced semiconductor firms.

Governance Concerns and an Unprecedented Dutch Intervention

Domestic pressure inside the Netherlands was building as well. Dutch oversight bodies had already raised concerns about what they described as governance shortcomings at Nexperia, prompting demands for clearer separation between the company’s Dutch management and its Chinese parent, Wingtech. There were calls for an independent supervisory board and for an end to dual leadership roles held by Wingtech’s founder and Nexperia’s CEO, Zhang Xuezheng. Wingtech initially signalled willingness to consider these changes. Yet when Dutch intelligence services suggested that Nexperia may have been shifting sensitive operations away from Europe despite earlier assurances, confidence in the proposed governance arrangements eroded sharply.

The government’s response was unprecedented. On 30 September 2025, invoking the rarely used Goods Availability Act, Dutch authorities placed Nexperia’s Dutch entity under temporary state control and suspended Zhang from his executive role. No such intervention had occurred in the Netherlands’ corporate history. Officials insisted the move was driven by national economic security rather than geopolitical pressure from abroad. Even so, it marked a decisive reframing of how European governments interpret Chinese ownership in sensitive industrial sectors.

China’s Retaliation and Europe’s Supply-Chain Shock

Beijing reacted swiftly. Chinese authorities halted exports from Nexperia’s assembly and testing operations in Dongguan, abruptly cutting off flows of automotive-grade components to Europe. Within days, manufacturers in Germany and Central Europe faced shortages, and production lines slowed or paused. Companies scrambled to find makeshift workarounds, including sourcing wafers directly from Nexperia’s Hamburg fab for packaging by third parties or qualifying substitute components from non-Chinese suppliers—an engineering process that normally requires months, not weeks. Europe’s industrial economy received a vivid demonstration of its dependence on Chinese capacity in a part of the semiconductor supply chain once considered benign.

Diplomatic pressure eventually defused the immediate crisis. In November 2025, the Dutch government suspended its takeover order as part of a broader effort to stabilise relations and normalise supply flows. China lifted its export block shortly after. Nonetheless, the confrontation exposed a deeper reality: China’s strength in mature-node manufacturing is not an incidental by-product of industrial policy but a deliberate outcome of sustained investment in segments where Western capacity has steadily eroded.

The Strategic Logic of Legacy-Node Dominance

Mature-node fabs may lack the glamour of cutting-edge facilities, but they remain indispensable to automotive, energy, telecommunications, and industrial systems. Their geopolitical significance rests not on technological prestige but on ubiquity and scale. The Nexperia case also illustrated how interdependence can become asymmetrical even in ostensibly low-tech domains. China still depends on the West for advanced semiconductors, but Western economies—especially European manufacturers—rely heavily on Chinese output for a vast range of legacy chips.

Mature-node manufacturing is capital-intensive and low-margin, and private incentives for reshoring or friend-shoring remain weak. Policymakers face the challenge of securing stable supply without recreating the very cost structures that encouraged offshore production in the first place.

A New Phase of Semiconductor Rivalry

If there is a lesson from this episode, it is that the global semiconductor industry is not defined solely by the technological frontier. Power also resides in the less visible layers of production that quietly underpin modern industry. China recognised earlier than its competitors that dominance in these layers can be strategically useful. The Nexperia crisis made that lesson uncomfortably clear for Europe and offered a preview of how legacy chips may shape the next phase of geopolitical and technological rivalry.