Dutch chipmaker Nexperia has announced a suspension of wafer supplies to its assembly plant located in Dongguan, southern China. This move, detailed in a letter addressed to customers and reviewed by Reuters, could significantly exacerbate the ongoing supply squeeze affecting automakers globally. The letter, dated October 29 and signed by Nexperia's interim CEO Stefan Tilger, indicates that the suspension, effective from October 26, is a direct result of the local management's failure to adhere to the agreed contractual payment terms.
The situation has escalated following the Dutch government's intervention, which took control of Nexperia from its former Chinese owner, Wingtech Technology (stock code: 600745), on September 30. This intervention also led to the removal of the Chinese CEO, raising concerns about potential technology appropriation by Wingtech. Following this change, Nexperia's Chinese unit resumed semiconductor supplies to local customers but mandated that all sales to distributors be conducted in the Chinese yuan instead of foreign currencies like the U.S. dollar.
Nexperia is known for producing large volumes of chips that are vital for both the automotive and consumer electronics industries. Notably, approximately 70% of the chips produced in Europe are packaged in China, primarily for distribution. In the letter, Nexperia stated, "While we have maintained shipments for as long as commercially feasible, continuing the current flow of supply from our front-end sites is no longer justifiable." The company emphasized that unless the contractual obligations are fully met, wafer supplies to the Dongguan site cannot resume.
Despite the suspension, Nexperia has assured customers that it is exploring alternative solutions to maintain supply continuity. The company clarified that this decision does not indicate an intention to withdraw from its Dongguan site or the Chinese market altogether. Nexperia reiterated its commitment to resolving the issues at hand, asserting its financial independence from Wingtech and confirming that it does not rely on Wingtech for capital.
A spokesperson for Nexperia confirmed the issuance of the letter but declined to comment further on the matter. Meanwhile, Nexperia China's response to inquiries was not immediate, and Wingtech also chose not to comment. The Dutch government has directed questions regarding the wafer supply suspension back to Nexperia, clarifying that this was a corporate decision while emphasizing that state intervention was aimed at preserving production capacity rather than interfering in day-to-day operations.
Discussions are ongoing between the Netherlands, European governments, the European Commission, and Chinese authorities to seek a constructive resolution. EU tech chief Henna Virkkunen mentioned that following a meeting with Nexperia management, efforts are being made towards a diplomatic breakthrough, alongside plans for unspecified short- and medium-term measures to alleviate pressures on the European industry.
Recent court filings reveal that the Dutch government's seizure of control over Nexperia coincided with rising U.S. pressure, particularly after Wingtech was placed on a restricted-export list. Furthermore, on October 4, China's commerce ministry obstructed Nexperia from exporting chips from China. The situation has alarmed industry bodies, with Stellantis (STLAM.MI) setting up a "war room" to closely monitor developments. In contrast, Nissan (7201.T) reported that it has sufficient chip inventory to last until the beginning of November without disruptions. Alarmingly, some Nexperia products have seen price increases from just a few Chinese cents to two or three yuan each over the past two weeks, reflecting more than a tenfold rise in cost.
