What’s next after China court freezes US$318m in Nexperia assets amid Wingtech battle?

In a significant development, a Chinese court has ordered the freezing of 2.14 billion yuan (US$318 million) in assets belonging to Nexperia-affiliated companies. The order, issued by the Dongguan Intermediate People's Court in Guangdong province, affects four subsidiaries of the Dutch firm, all located in the cities of Dongguan, Shanghai, and Wuxi.

The asset freeze is set to last for three years, until August 2029. Despite the freeze, the daily operations of these subsidiaries are not to be affected, according to Luo Zhiyu, a Beijing-based lawyer who specializes in cross-border transactions and overseas listings. The court's decision is a key development in the ongoing custody battle between Nexperia and Wingtech, a Chinese semiconductor company that has been locked in a legal dispute with the Dutch firm.

Wingtech had filed a lawsuit against Nexperia and three of its executives in May under China's anti-foreign sanctions law, demanding full control over Nexperia and compensation of 8 billion yuan (US$1.17 billion). The asset freeze could potentially be revoked after a court ruling, which typically takes three months, though it could extend through normal litigation to one to three years, or even longer, according to lawyers at Shanghai-based Joint-Win Partners.

The power struggle, which began in September, has led to the virtual break-up of Nexperia's China team, responsible for about 70% of the company's global output, and its operations outside China.