Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Nexperia’s Chinese subsidiary has restarted semiconductor shipments to local distributors, with all transactions now mandated in Chinese yuan, according to sources familiar with the matter. This move follows a temporary halt in exports after Beijing banned shipments due to an ownership dispute involving the Dutch chipmaker and its Chinese parent, Wingtech Technology.
Operational Changes and Currency Mandate
Previously, Nexperia’s Chinese unit settled transactions with distributors in foreign currencies, primarily the U.S. dollar. The new mandate extends to distributors, who have been instructed to conduct their sales to customers exclusively in yuan. This shift appears to be an effort to stabilize supply within China and enhance the Chinese unit’s operational independence from its Dutch parent.
Nexperia, now under Dutch government control, manufactures significant volumes of chips crucial for the automotive industry and consumer electronics. The majority of these chips undergo packaging in China before being sold, predominantly to distributors.
Seeking Alternative Packaging and Quality Concerns
Amidst the ongoing dispute, Nexperia is actively seeking alternative packaging partners outside China, as a swift resolution with its Chinese subsidiary remains uncertain. The company has also issued warnings to its Chinese customers regarding the quality of products sourced from its Chinese subsidiary, though a spokesperson clarified that this does not constitute an instruction to avoid purchasing these products.
A Nexperia spokesperson stated that efforts to find packaging partners outside China predated the current dispute and are not a direct response to it. The Chinese unit, in a statement on its WeChat account, asserted its independent operation and accused its Dutch parent of raising “groundless doubt” about product compliance, indicating a potential pursuit of legal options.
Background to the Dispute
The Dutch government assumed control of Nexperia on September 30, removing its Chinese CEO, Zhang Xuezheng. This action was prompted by concerns that Nexperia’s technology could be appropriated by Wingtech Technology, its Chinese parent company. Court filings indicate that this seizure followed increased U.S. pressure on Nexperia after Wingtech was placed on a restricted export list, although Dutch authorities cited governance shortcomings as the primary trigger.
On October 4, China’s commerce ministry retaliated by blocking Nexperia from exporting chips from China, leading to the Chinese unit’s suspension of shipments from its main Dongguan factory to all distributors.
Global Supply Chain Impact
The dispute has intensified concerns regarding potential disruptions to global supply chains, particularly within the automotive industry. Nexperia is a major global producer of basic chips, which, despite not being technologically complex, are required in large quantities across various sectors.
The Japan Automobile Manufacturers Association recently reported that Japanese automotive component makers had been notified by a Dutch semiconductor manufacturer about potential chip delivery issues, which could significantly impact global production. The German economy ministry has also scheduled discussions with automakers and suppliers to address developments related to Nexperia. Efforts by the Dutch economy minister to reach a solution with his Chinese counterpart have, thus far, been unsuccessful.
