European Tech Bows Out

People ask me, well, why the Europeans never developed a thriving and meaningful tech sector.

I’ll give you a recent example of why they never will, so just keep reading along.

The Netherlands’ stealing of China-owned chip company Nexperia has to be one of the biggest own goals in recent tech history, and highlights the poor level of federal governance in the European Union.

There is a reason why no serious person would ever open any brand-name company in the European Union.

Regulation built on regulations kills the business environment. Now the EU is resorting to outright theft.

Activities that have been halted at Nexperia include decisions on hiring, asset transfers, or IP relocations for up to a year, aiming to prevent potential leakage of critical chip know-how to China.

The Dutch even switched out the CEO for a local guy.

Nexperia produces over 110 billion discrete semiconductors annually for EVs, AI data centers, and consumer electronics. Now operates under tight oversight, with daily production intact but global subsidiaries frozen.

Beijing retaliated on October 4 with export controls, barring Nexperia China and its subcontractors from shipping finished components, disrupting roughly 50% of the firm’s supply chain reliant on Chinese packaging and assembly.

With a flick of a switch, 10,000 well-paid European jobs have gone up in smoke.

European autos like VW and BMW, which rely heavily on Nexperia’s wide-bandgap chips for EV chargers, scramble for alternatives, delaying production lines by 12-18 months.

This aids U.S. efforts to starve China’s semiconductor self-sufficiency, protecting domestic leaders like Intel and Nvidia from IP theft or subsidized competition.

Short-term, it shields American firms from supply shocks: Nexperia’s chips feed U.S. allies’ chains, indirectly supporting Qualcomm or Broadcom in AI and autos.

Yet, the trade war’s intensification spells volatility for U.S. tech stocks. The CHIPS Act’s $52 billion infusion has juiced semis—SMH ETF up 45% YTD—but Nexperia’s fallout reignites fears of fragmented chains, with Q4 shortages potentially trimming GDP 0.5-1% via downstream hits.

The suspension of operations at Nexperia accelerates demand for Intel’s domestic discretes/logic chips.

NVIDIA (NVDA) should also do well with its new Blackwell chips. 

Micron, AMD, and Broadcom are names to look at as well.

Europe is being squeezed by both sides and is showing that they don’t have the backbone to make a stand.

While the U.S. and China duke it out, it appears that the one guarantee that will come out of this is a collapsing business environment in Europe.

Europe is already getting squeezed by the military conflict.

Moving forward, I expect more tech companies to end up as collateral damage, which doesn’t bode well for a healthy trading environment.

In fact, the unrelenting geopolitical aggression has forced capital to migrate into gold, and the rest of the non-tech economy has been left behind.

Wait for dips in tech and stick with the tried and tested.