Author: Lawyer Zhang Jingxinyue, PRC-qualified Lawyer | Singapore Registered Foreign Lawyer
Editor’s Note: In recent years, Chinese enterprises’ overseas investments in semiconductors, AI, communications, high-end manufacturing, and other fields have increasingly faced uncertainty arising from “national security,” “economic security,” and supply chain security reviews. In Europe and the United States in particular, the scope of security review is no longer confined to traditional defense sectors, but has gradually expanded to chips, data, key technologies, supply chain stability, and even corporate governance structures themselves.
Recently, a dispute over control between Wingtech Technology and its controlled subsidiary Nexperia has once again drawn market attention to the risks of Chinese companies’ cross-border M&A. According to public information, the relevant events do not stem from a single transaction approval issue; rather, they are compounded by multiple factors, including the Dutch government’s intervention based on economic security grounds, control arrangements at the court and corporate governance levels, export control impacts, and semiconductor regulatory games among China, the United States, and Europe.
Whatever the final outcome, the event sends an increasingly clear signal: in cross-border M&A in sensitive industries, “completing the transaction” does not mean the end of risk; the real challenge often emerges only after the M&A transaction is completed.
01 Why Would a Chinese Company Encounter “Control Risk” Overseas?
Nexperia traces its origins to Philips’ semiconductor business and has strong global influence in discrete devices, logic devices, and automotive-grade chips. Around 2018, Wingtech Technology acquired control of Nexperia through a cross-border M&A transaction valued at approximately USD 3.63 billion. The deal was once regarded as an important case of a Chinese company entering the global semiconductor supply chain.
But in recent years, as international competition in the semiconductor industry has intensified and European and American countries have continued to tighten regulation of critical technology sectors, cross-border M&A projects that had already closed may also be exposed again to regulatory and governance risks. In 2024, the United States added Wingtech Technology to the Entity List, and subsequent rule adjustments have also affected its majority-owned subsidiaries.
In public market discussions, a notable change is that past cross-border M&A focused more on antitrust, financial structure, and business integration. Today, factors such as “national security,” “supply chain security,” “technology controllability,” and “data flows” are increasingly and deeply affecting transaction stability.
For the semiconductor industry, even after an enterprise has completed the equity transfer, it may still continue to face several categories of risk: national security or economic security reviews, the impact of export controls and the Entity List, supply chain restrictions and customer compliance reviews, regulation of data and technology access, and the risk of ongoing intervention at the corporate governance level.
In other words: “control” in the traditional sense no longer automatically equates to “stable control.”
02 The Review Logic in European and American Countries Is Changing
In recent years, the regulatory systems of European and American countries for high-tech industries have shown a clear trend of tightening. The United States has continued to expand the scope of export controls and the Entity List; the UK’s National Security and Investment Act (NSI Act) has strengthened the government’s power to intervene in transactions in sensitive industries; at the EU level, in addition to traditional merger review, the Foreign Subsidies Regulation (FSR) has also begun to affect foreign capital M&A transactions from the perspective of subsidies and fair market competition; and many countries have continued to increase investment restrictions in industries such as semiconductors, AI, communications, and data centers.
It is worth noting that many reviews do not occur only before a transaction. The Wingtech-Nexperia incident is particularly noteworthy in one respect: for sensitive technology companies, even if a transaction has been completed for many years, once the external security environment, export control rules, or corporate governance structure changes, the host country may still re-intervene through paths such as economic security, corporate governance, or judicial proceedings. Some countries’ regulatory mechanisms have already exhibited features such as long-cycle continuous supervision, ongoing supervision of existing transactions and already operating assets, corporate governance intervention, supply chain security review, and parallel review of data and technology control.
For Chinese companies, this means that the risk assessment logic for cross-border M&A has shifted from “whether the transaction can be completed” to “whether the business can be operated stably over the long term after completion.”
03 What Chinese Companies Have Most Easily Overlooked in the Past Is Actually the “Post-Acquisition Risk”
In the cross-border M&A phase, many companies devote substantial resources to completing financial due diligence, legal due diligence, tax structuring, transaction financing, domestic and foreign approvals, and other work. However, what is often underestimated is the long-term governance risk after completion. Especially in sensitive industries, enterprises may face challenges at the following three levels:
1. Geopolitical Risk
Policy coordination between the target country and the United States is increasingly and directly affecting technology industry regulation. Even if some countries have limited market size on their own, because they are deeply embedded in the European and American technology system, their regulatory actions may still have a significant impact on enterprises.
2. Data and System Control Risk
Without commenting on the specific system arrangements of any individual case, and looking only at the general risks of cross-border M&A: after many Chinese companies complete overseas acquisitions, their core operating data, ERP systems, financial systems, and audit documentation remain highly dependent on overseas teams and local systems. Once governance conflicts or regulatory restrictions arise, the domestic parent company’s ability to supervise overseas business may rapidly decline. For listed companies, this may even further affect financial consolidation, audit evidence collection, information disclosure, and going-concern assessments.
3. Corporate Governance Risk
After a cross-border M&A transaction is completed, companies often retain the original management team and local governance structure to ensure business stability. In a complex political environment, however, corporate governance arrangements themselves may become a trigger point for risk. The authority settings of local directors, senior executives, legal affairs personnel, and core technical leads are both the foundation of operational stability and may become key nodes in a change of control when external regulatory intervention occurs. In particular, with respect to board structure, nomination rights for key positions, data access rights, core technology control, and voting mechanisms for major matters, if adequate contingency plans are lacking, enterprises may face a decline in actual control capability when external conflicts arise.
04 Three Practical Reminders for Cross-Border M&A in Sensitive Industries
1. Geopolitical Risk Assessment Should Be Front-Loaded to the Early Transaction Stage
In the past, many companies regarded geopolitical risk as a “macro issue.” In the current environment, however, it has become a core variable affecting transaction stability. It is advisable for companies to assess at the initial stage of a project: the host country’s regulatory tendencies, the degree of policy coordination with the United States, whether sensitive technologies are involved, whether the target is part of a critical supply chain, and whether there is subsequent export control risk.
2. Do Not Plan Only for “Closing”; Also Plan for “Long-Term Control Design”
Cross-border M&A does not end once the SPA is signed. More important is whether the enterprise has truly established a long-term, stable operational and governance mechanism. This includes data access arrangements, critical system backups, core technology and intellectual property rights, domestic and overseas information synchronization mechanisms, contingency governance plans, and key personnel replacement mechanisms—these often determine whether an enterprise can maintain operational stability in extreme circumstances.
3. Supply Chain Resilience Has Become a Legal Issue
In the past, enterprises mostly viewed supply chains as a commercial issue. In the current international environment, however, supply chain security itself already directly affects compliance, export licensing, production continuity, data flows, and national security review. Especially in semiconductors, AI, high-end manufacturing, and other fields, “independent and substitutable capabilities” are increasingly becoming an important foundation for long-term stable operations.
Conclusion
Regardless of how the Wingtech-Nexperia incident ultimately develops, it has already revealed one reality: the global cross-border investment environment is shifting from an era of commercial globalization to an era of geopolitical and regulatory restructuring.
For Chinese enterprises, future cross-border M&A is not merely a capital transaction and business integration; it is also a long-term competition centered on compliance capabilities, governance capabilities, data control capabilities, supply chain resilience, and geopolitical risk management capabilities.
This is also redefining “going global” itself: what enterprises really need to solve is not merely whether they can acquire assets, but whether they can operate those assets in a long-term, stable, and controllable manner under a complex regulatory environment.
- This article is compiled based on public information, industry research, and cross-border investment regulatory trends. It is for general information and reference only and does not constitute any specific legal advice or investment advice. Different enterprises differ in industry attributes, target countries, transaction structures, and regulatory environments. Specific matters should be analyzed by professional cross-border lawyers on a case-by-case basis.
- If you would like to learn more about cross-border investment M&A risk control and geopolitical compliance, please contact professional advisors at Zhongxin Faxun.
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Author | Cross-border Investment Team
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.