Wingtech Technology Co. plunged its daily limit of 10% after the Dutch government moved to exert control over its European unit Nexperia, an unusual move that risks inflaming tensions between China and Europe.

The Dutch government invoked the Goods Availability Act to take control of the Netherlands' car chipmaker in September, citing national security concerns. While Nexperia can continue regular production, the government can now block or reverse its decisions.

The Hague is demanding that Wingtech suspend changes to Nexperia’s assets, business or personnel for up to a year, a requirement that extends to its subsidiaries, the Chinese firm said in its own statement Sunday.

The unilateral move — which the Dutch government called “highly exceptional” — underscores growing scrutiny of Chin

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