The Chinese billionaire accused of heist that threatens car industry

But gradually a different story emerged, with Zhang as the protagonist.

According to the Dutch government, the globe-trotting executive was on the verge of executing a bold plan to gut Nexperia, transfer its technology to China and enrich himself in the process.

Zhang boasts a daring entrepreneur story that matches the child prodigy stories of Bill Gates and Steve Jobs. He was born into a farming family in the regional city of Meizhou. At the dawn of China’s entry into the World Trade Organization, he worked for local mobile phone manufacturers, including national champion ZTE, and then left to start his own manufacturer with two colleagues.

He was accused of charging more than his fellow employees. In 2005, a court sentenced him to 17 months in prison for stealing ZTE’s trade secrets to expand his own company.

When he got out of prison, he started again to found Wingtech. According to a profile in a Chinese financial newspaper Securities TimesHe founded the company with the equivalent of £10,000 and went door to door in Shenzhen’s electronics hub, carrying two computers and a mobile phone, to sell his circuit board design to manufacturers.

The company then moved into assembling smartphones on behalf of a new generation of low-cost Chinese manufacturers such as Xiaomi and Huawei, before landing a major customer in Apple.

But Nexperia represented its biggest bet yet. The company’s history dates back to British manufacturer Mullard, whose radio vacuum tubes helped fuel the rise of BBC Radio. It was acquired by Dutch giant Philips in the 1920s, making it one of Europe’s microchip pioneers.

In 2016, the company now known as NXP was looking to spin off its commodity chips business, where simple components are mass-produced, to pay down debt and focus on more profitable high-end devices. Spinoff Nexperia was sold to a Chinese consortium in 2019, with Wingtech taking full control.

Zhang appointed himself chief executive the following year and has since divided his time between China, the Netherlands and San Francisco.

His net worth is estimated at $1 billion ($1.5 billion), according to Forbes, although that figure is down from $2.2 billion three years ago. In 2020, he broke his personal best by leading a group of Wingtech employees to run in the Shanghai marathon.

The Nexperia deal initially faced almost no Western scrutiny. The US agreed to the takeover and it did not even merit an investigation in Europe. Few people in the West had heard of Wingtech. The Bloomberg headline about the deal included the following statements: “It is unclear whether the Chinese company will purchase Nexperia for $3.6 billion.”

Loading

In fact, it raised more eyebrows in China. The country’s Securities Regulatory Commission forced Zhang to hold a press conference announcing the deal, given the change in strategy and the amount of debt required for the takeover. Zhang explained that the deal is part of its strategy to move upmarket by shifting from electronics assembly to the more profitable semiconductor business.

This won’t be the only conflict with Chinese officials. In 2019, the Shanghai Stock Exchange reprimanded executives for failing to disclose that a subsidiary had borrowed money at expensive rates from a company affiliated with a major shareholder. Zhang was later fined 8 million yuan ($1.7 million) for failing to disclose that he had acted with other investors to buy shares in the company.

The company only began to attract Western attention in 2021. In July, Nexperia paid £65 million to buy Britain’s largest microchip facility, Newport Wafer Fab, which was in financial trouble as the carmaker grappled with a world chip shortage.

Conservative MP Tom Tugendhat called on the Government to investigate the takeover on national security grounds. Boris Johnson’s government initially refused, but later relented and the deal was blocked a year later when Nexperia was forced to sell the plant. A source tells Telegram It turns out that new intelligence from US sources was a reason to undermine the takeover.

Opponents of the deal at the time raised the possibility that Nexperia might have transferred technology from Newport to technology bases in China during the 18 months it owned the facility. This has never been proven, but recent events have brought the issue to light again.

Dutch authorities accuse Zhang of transferring intellectual property rights from Nexperia to a “foreign entity” believed to be WingSky Semi, a separate microchip company owned by Zhang.

Local reports say it contains details of chip manufacturing processes at Nexperia’s Manchester facility, and that Zhang also plans to move the equipment before shutting down Nexperia’s European operations.

They also allege that Zhang used Nexperia to prop up his other company, placing US$200 million worth of orders for WingSky Semi in excess of what he needed and firing executives who complained. US officials have separately described Zhang’s management of Nexperia as “problematic”. The UK Government announced that it was monitoring the situation.

Wingtech said that it rejected the allegations of “technology transfer” and “technology theft” and that the “collaboration” with WingSky was approved by the company’s bosses, while Zhang abstained. There was no comment on Zhang’s previous criminal convictions or contacts with Chinese regulators.

The company requested that Zhang be reinstated. The chances of this seem very slim. While Nexperia stopped sending chips to China for processing, the Chinese company instructed the company’s local staff to ignore orders from the Netherlands.

Zhang has previously complained about being dragged into geopolitics. He told a conference in China this year that globalization was a “historical inevitability” and opposed the forced sale of Wingtech’s consumer electronics division under US sanctions earlier this year.

“It’s ridiculous that I have to sell my company,” he told the Dutch outlet NRC earlier this year. “Americans say we are a Chinese company. In China, they say we are a Dutch company. How can we survive like this?”

Loading

Dutch authorities say Zhang actually brought the situation on himself by trying to misuse Nexperia for his own financial gain.

The Dutch Ministry of Economic Affairs accuses him of “undermining production capacities in Europe” and “misusing financial resources for the CEO’s self-enrichment.”

He says intervention is needed to “protect this ecosystem that is vital for Europe”. If the technology was indeed transferred from Manchester to China, it may be too late.