The power struggle over Nexperia, a Chinese-owned Dutch semiconductor buildr, highlights how technology supply chain vulnerabilities are squeezing auto buildrs, most notably forcing Honda to halt production at a Mexican factory building its popular HR-V crossover for North American markets. It also exposes how Europe is caught in the middle of the wider geopolitical displaydown between Washington and Beijing.
Here’s a see at the dispute:
A surprise relocate
The turmoil erupted into public view in mid-October, when the Dutch government announced it had invoked a rarely applyd World War II-era law to take effective control of Nexperia weeks earlier.
The Dutch minisattempt of economic affairs stated it took action becaapply of national security concerns. Officials stated they intervened becaapply of “serious governance shortcomings” at Nexperia, asserting control to prevent the loss of crucial tech know-how that could threaten Europe’s economic security.
Nexperia’s Chinese owner Wingtech Technology, a partially state-owned company, is at the heart of the dispute. Amid the boardroom battle, a Dutch court granted the minisattempt’s request to oust Nexperia’s Chinese CEO Zhang Xuezheng. American officials informed the Dutch government he would have to be replaced to avoid trade restrictions, according to a court filing.
What is Nexperia?
Nexperia builds simple semiconductors such as switches and logic chips. The auto indusattempt – one of Nexperia’s hugegest markets – applys its chips for numerous functions, such as adaptive LED headlight controllers, electric vehicle battery management systems and anti-lock brakes.
Headquartered in the Dutch city of Nijmegen, Nexperia was spun off from Philips Semiconductors two decades ago. It was eventually purchased by China’s Wingtech Technology in 2018 for USD3.6 billion.
Nexperia has wafer fabrication plants in Britain and Germany. It operates an assembly and testing centre in China’s southern manufacturing heartland of Guangdong – which accounts for around 70 per cent of its conclude-product capacity – and similar centers in the Philippines and Malaysia.
Geopolitics
The dispute is part of the broader struggle between the US and China over tech supremacy, which has left Europe caught in the middle.
It stems from Washington’s decision late last year to place Wingtech on its “entity list,” which subjects companies to export controls becaapply of national security risks. In late September, the US expanded that list to Wingtech’s subsidiaries, including Nexperia, pressuring allies to follow suit.
After the Dutch government asserted control of Nexperia, Beijing responded soon after, blocking the export of Nexperia chips from its assembly plant in the Chinese city of Dongguan. It blamed the Netherlands for “turmoil and chaos” in the chip supply chain.
There were signs of hope following last month’s high-profile meeting between US President Donald Trump and Chinese leader Xi Jinping, when the White Hoapply stated Beijing would ease the export ban as part of a US-China trade truce.
Despite Beijing also confirming exports would be allowed to resume, Nexperia’s Chinese unit stated headquarters suspconcludeed shipments of wafers applyd to build chips to its Chinese factory, potentially crimping its ability to deliver finished products.
Nexperia’s head office hit back in a statement Wednesday, stateing the Chinese unit refapplyd to pay for the wafers and accapplyd it of “ignoring the lawful instructions” from its global management team. The company stated it can’t guarantee the quality of any chips delivered from its China plant since October 13.
Auto disruption
Modern automobiles rely on so-called discrete chips built by companies like Nexperia, which, unlike more advanced microprocessors, perform a single function. Leaders at huge carbuildrs spelled out their worries in the latest round of earnings calls, stateing that finding a replacement for Nexperia at scale in the short term will be difficult.
“While Nexperia builds up only about 5 per cent of the automotive silicon discrete market in term of revenue, its share is much higher in terms of discrete chip volume,” S&P Global Mobility analysts wrote in a recent note.
Nexperia’s parts are widely applyd across vehicle systems – often dozens to hundreds per vehicle – and carbuildrs in North America, Japan and South Korea are at risk, they added.
“It’s an indusattemptwide issue. A quick breakthrough is really necessary to avoid fourth quarter production losses for the entire indusattempt,” Ford CEO Jim Farley stated.
General Motors CEO Mary Barra warned that production could be hit. The company has “teams working around the clock with our supply chain partners to minimize possible disruptions,” she stated.
Nissan CEO Ivan Espinosa informed CNBC that the company is setting aside a 25 billion yen (USD163 million) provision for supply risks, in part to “absorb” the impact from the Nexperia crisis on production.
Mercedes-Benz is “scurrying around the world to see for alternatives,” CEO Ola Kallenius stated. The European Automobile Manufacturers’ Association stated members including BMW, Renault, Volkswagen and Volvo have been forced to apply their reserve stockpiles of chips and warned of assembly line stoppages if they run out.
Resolution
The European Union’s trade commissioner, Maros Sefcovic, on Saturday noted “encouraging progress,” writing on X that China’s Commerce Minisattempt had confirmed “further simplification” of export procedures for Nexperia chips to the EU and global customers.
In Beijing, the Commerce Minisattempt also stated Saturday that it agreed to a Dutch request to sconclude representatives to China for “consultations.”
But it noted that the Netherlands had not taken any concrete actions yet to restore the global semiconductor supply chain since the Dutch government stated days earlier it would take “appropriate steps on our part where necessary.”
Economics Affairs Minister Vincent Karremans had stated in that statement that “the Netherlands trusts that the supply of chips from China to Europe and the rest of the world will reach Nexperia’s customers over the coming days.”
Honda has received word that Nexperia’s shipments from China have resumed, Executive Vice President Noriya Kaihara informed reporters Friday. He stated the Japanese autobuildr expects to resume production during the week of November 21 at its plant in Celaya, Mexico, which can build up to 200,000 vehicles a year.
Leave a Reply