BRUSSELS — The Dutch government has granted itself the power to intervene in company decisions at Dutch-based Chinese-owned chipmaker Nexperia.

The highly unusual step, announced late Sunday, grants the country the power to “halt and reverse” company decisions — meaning Nexperia cannot transfer assets or hire executives without Dutch government approval, according to national media.

The move is a significant escalation in relations between the Netherlands and China and could inflame wider trade tensions between Beijing and the European Union, with Europe caught in the middle of a tit-for-tat chips war between the U.S. and China.

Nexperia is headquartered in Nijmegen, in the northeast of the Netherlands, and has been controlled by Wingtech since 2019. Recently there have been “signals” of “serious administrative shortcomings” at Nexperia, the Dutch government said Sunday.

These shortcomings could “threaten the continuity and safeguarding of crucial technological knowledge and capacity on Dutch and European soil,” the government said, confirming it took the decision to intervene in company operations Sept. 30.

While it didn’t outline the shortcomings in detail, the government cited concerns over Nexperia’s future as a Dutch and European-based company — hinting at possible fears of tech leakage, meaning property and know-how are transferred to China.

Regions are increasingly seeking to bring production of chips — an important geopolitical asset — to their home shores. Nexperia is a vital chip supplier for Europe’s car industry.

The order is meant to safeguard the availability of Nexperia’s products in an emergency situation, and doesn’t affect regular proceedings, according to the government.

Wingtech slammed the Dutch intervention in a statement quoted by the Financial Times as “an act of excessive interference driven by geopolitical bias, not by fact-based risk assessment,” and said it had appealed to the Chinese government for assistance.

A Nexperia spokesperson declined to comment further to POLITICO.

“Nexperia complies with all existing laws and regulations, export controls and sanctions regimes,” the spokesperson said. “For the same purposes, we remain in regular contact with relevant authorities.”

Wingtech said Sunday in a filing that company executive Zhang Xuezheng was already suspended as a director at Nexperia by a Dutch court in early October.

Nexperia has had run-ins with several European governments in recent years. It was in 2022 forced by the U.K. to divest a chip manufacturing plant in Wales based on national security grounds. U.S.-based manufacturer Vishay Intertechnology eventually bought the factory.

In 2023, the Dutch government scrutinized Nexperia’s acquisition of the Dutch chips startup Nowi under an investment-screening law, eventually waiving it through.

Dutch liberal European Parliament lawmaker Bart Groothuis welcomed the move while noting it was an unusual move by the Dutch government. “The Chinese management of chip maker Nexperia is being discharged, and the direction is back at the company,” he said.

Wingtech shares tanked by more than 10 percent on Monday morning.