Chipmaker Nexperia warns customers that products from China after October 13 may not be authentic or meet quality requirements. The Dutch manufacturer is facing a crisis following government measures and Chinese export restrictions.
The Dutch chip company Nexperia finds itself in a complex situation. On September 30, the Dutch government intervened by taking control of the company. Shortly thereafter, Beijing imposed export restrictions. This disruption is severely affecting the production chain, because although 70 percent of Nexperia’s chips are made in Europe, they are packaged and distributed in China.
The measures follow revelations about possible chip knowledge leaks to China. The Dutch government took control due to concerns about the intentions of Chinese parent company Wingtech. A Dutch court then removed CEO Zhang Xuezheng from his position.
Nexperia confirmed on Thursday that factories outside China will continue to operate normally. “We remain fully committed to our operations in China,” the company said. The facilities in Malaysia and the Philippines process the remaining 30 percent of production.
Diplomatic chess for a solution
An American deal offers some breathing space. Nexperia reports that the company will not be subject to American export restrictions for a year. China has also agreed to look at export opportunities on a case-by-case basis. However, these concessions are temporary and do not offer a structural solution.
The Chinese authorities accuse the Netherlands of failing to engage constructively. Beijing warns that further supply chain disruptions are inevitable without concessions from the Netherlands. The White House and EU Trade Commissioner Maroš Šefčovič report “progress” in talks, but concrete results are still lacking.
The situation presents outgoing Minister of Economic Affairs Vincent Karremans with a difficult task. He is holding talks with Beijing about next steps, but must also defend Dutch interests.
Shortage threatens European auto industry
The crisis is hitting car manufacturers particularly hard. European producers are expressing serious concerns about a possible chip shortage. Volkswagen has already acquired alternative suppliers to keep its production lines running. Nexperia supplies essential components for modern vehicles.
Recent revelations about the possible theft of British trade secrets by CEO Zhang further complicate the situation. He is alleged to have attempted to move production to China and close European factories. He also reportedly stole information about MOSFET production from the United Kingdom.
The problems at Nexperia illustrate the vulnerability of European chip production. Although most of the work takes place in Europe, the industry depends on Chinese packaging facilities. That dependence is now proving to be a strategic weakness in times of geopolitical tension.