China has announced a decision to permit the export of certain chips from Nexperia, a Netherlands-based semiconductor manufacturer, as an increasing shortage of these critical components threatens to disrupt auto production globally. This announcement follows the Dutch government’s recent acquisition of control over Nexperia after the U.S. expanded its export blacklist to include the company, primarily due to rising governance concerns associated with its Chinese ownership.
In response to the chip shortages, China’s commerce ministry has invited companies experiencing difficulties to reach out to commerce officials. A spokesperson from the ministry stated that exemptions for eligible exports would be considered based on the specific circumstances of the companies involved. The ministry underscored the need to focus on the security and stability of both domestic and international supply chains.
This shift in China’s stance comes shortly after U.S. President Donald Trump and Chinese President Xi Jinping reached a one-year truce in their ongoing trade war during a summit in South Korea. A part of the agreement entails China suspending extensive export controls on rare earth minerals in exchange for the U.S. refraining from expanding its technology export bans to subsidiaries of Chinese companies. Discussions between Chinese and EU officials in Brussels also touched on export controls regarding rare earths and Nexperia, with the European Commission expressing approval of China’s decision to suspend the rare earth controls.
The recent developments indicate a potential easing of tensions that have severely affected European, U.S., and Japanese automobile manufacturers, disrupting access to crucial chips necessary for various components including airbags and lighting systems. This disruption threatens the production capabilities of major car manufacturers.
Nexperia was sold to a Chinese consortium in 2017 and later acquired by Chinese company Wingtech. However, last year, the U.S. added Wingtech to its commerce department blacklist, prompting the Dutch government to seize control of Nexperia in October, citing “serious governance shortcomings.” This takeover has created a divide between Nexperia’s management in the Netherlands and its operations based in China.
The semiconductor wafers produced by Nexperia are manufactured in Germany and the UK before being sent to southern China for packaging and assembly, from where they are distributed globally. Major automakers like Volvo Cars and Volkswagen recently warned of temporary shutdowns at their European plants unless the ongoing dispute is resolved. Ford’s CEO Jim Farley has indicated that the U.S. government is working to address the issue.
The commerce ministry in China has criticized the Dutch government’s “inappropriate interference” in Nexperia’s internal operations, attributing the chaos in the global supply chain to this action. Tensions have escalated due to governance concerns surrounding Wingtech’s controlling shareholder, Zhang Xuezheng. He reportedly initiated plans to establish a new semiconductor factory in Shanghai, which fell outside the purview of both Nexperia and Wingtech. Documentation suggests he compelled Nexperia to place significant orders from this new facility, which was not necessary for the company’s operations. Following the Dutch government’s management acquisition, Zhang was removed from his position as Nexperia’s chief executive.
In the face of these challenges, Wingtech has expressed concern about the future of Nexperia, labeling the situation an “existential threat” and warning that hundreds of jobs could be at risk. They pointed out their belief that the Dutch government’s actions could be a strategic move to facilitate a takeover of Nexperia by a Dutch entity, asserting that any successor to Nexperia may be doomed to fail.
