The Dutch government’s intervention at Nexperia led to a de facto breakup of the company. The Chinese production arm now operates separately from the European headquarters, causing one of the world’s largest suppliers of standard chips to fall apart.
Follow recent developments surrounding Nexperia in our live blog.
This is evident from an extensive analysis by NRC. The split followed the decision by the Ministry of Economic Affairs to place Nexperia under emergency legislation at the end of September and the suspension of CEO Zhang Xuezheng by the Enterprise Chamber. Shortly thereafter, the Chinese branch of Nexperia, including the large assembly plant in Dongguan, declared itself effectively independent from Nexperia BV in Nijmegen. Since then, the factory has been supplying Chinese customers directly and no longer uses the group’s international distribution model.
From integrated chain to fragmentation
Nexperia enjoyed years of success thanks to a highly integrated production chain. Silicon wafers were produced in Germany, among other places, while packaging and testing took place largely in China and Southeast Asia, after which the chips were delivered worldwide. That structure has now been broken. European factories have less control over Chinese production, while the Chinese branch has less access to wafers and technology from Europe.
As a result, both entities are operating less efficiently. The European organization is facing uncertainty about sales and investments, while the Chinese factory is struggling to maintain the supply of wafers. Large customers are improvising by shipping wafers themselves or looking for alternative suppliers, but smaller customers in particular are encountering delivery problems.
It is striking that the conflict revolves around so-called legacy chips: diodes, transistors, and power switches. These relatively simple components are inexpensive but essential for virtually all electronic devices. The automotive industry in particular is heavily dependent on this type of chip; modern vehicles contain hundreds of them.
The temporary Chinese export ban on Nexperia products showed how sensitive this market is. Car manufacturers almost immediately warned of production stoppages and rising prices. Although China has now partially resumed exports, this is done through permits, which means that deliveries remain selective and politically controllable.
Structural uncertainty for the market
The situation remains uncertain for European and American customers. The European branch of Nexperia is investigating alternatives outside China, including expanding capacity in Malaysia, but that requires time and capital. At the same time, the company is facing a legal quagmire: former CEO Zhang Xuezheng and parent company Wingtech have appealed against the ruling of the Enterprise Chamber.
The legal proceedings could take months or even years, leaving investors and customers in limbo. In the meantime, Nexperia is no longer functioning as a single neutral global player, but as two separate organizations in different geopolitical blocs.