The battle for control of a little-known chipmaker has threatened global auto production by strangling the semiconductor supply chain, although there are signs that the crisis is headed toward resolution.
The power struggle over Nexperia, a Chinese-owned Dutch semiconductor maker, highlights how vulnerabilities in the technology supply chain are putting pressure on automakers, most notably Honda being forced to halt production at a Mexican plant that makes its popular HR-V crossover for North American markets. It also reveals how Europe is caught in the middle of the broader geopolitical standoff between Washington and Beijing.
Here’s a look at the dispute:
The unrest erupted into public view in mid-October, when the Dutch government announced it He cited a rarely used law dating back to the World War II era To effectively control Nexperia weeks ago.
The Dutch Ministry of Economic Affairs said it took this action due to national security concerns. Officials said they intervened due to “serious management deficiencies” at Nexperia, asserting control to prevent the loss of important technical know-how that could threaten Europe’s economic security.
Wingtech Technology, the Chinese owner of Nexperia, a partly state-owned company, is at the center of the dispute. In the midst of the boardroom battle, a Dutch court granted the ministry’s request to dismiss Nexperia’s Chinese CEO Zhang Xuezheng. US officials told the Dutch government that it would have to be replaced to avoid trade restrictions, according to the court filing.
Nexperia makes simple semiconductors such as switches and logic chips. The automotive industry – one of Nexperia’s largest markets – uses its chips in many functions, such as controllers for adaptive LED headlights, electric vehicle battery management systems, and anti-lock brakes.
Headquartered in the Dutch city of Nijmegen, Nexperia was spun off from Philips Semiconductors two decades ago. It was eventually purchased by Chinese company Wingtech Technology in 2018 for $3.6 billion.
Nexperia has chip manufacturing plants in Britain and Germany. It operates an assembly and testing center in the southern Chinese manufacturing heartland of Guangdong – which accounts for about 70% of finished product capacity – and similar centers in the Philippines and Malaysia.
This dispute is part of the broader struggle between the United States and China over technological superiority, which has left Europe stuck in the middle.
This stems from Washington’s decision late last year to place Wingtech on its Entity List, which subjects companies to export controls due to national security risks. In late September, the United States expanded that list to include Wingtech subsidiaries, including Nexperia, and pressured allies to do the same.
After the Dutch government asserted its control over Nexperia, Beijing responded shortly after, blocking the export of Nexperia chips from its assembly plant in the Chinese city of Dongguan. It blamed the Netherlands for “turmoil and chaos” in the chip supply chain.
There were signs of hope after a high-level meeting last month between US President Donald Trump and Chinese leader Xi Jinping, when the White House said Beijing would ease the export ban as part of a US-China trade truce.
Although Beijing also confirmed that exports would be allowed to resume, Nexperia’s Chinese unit said at headquarters Pending shipments of chips It is used to manufacture chips for its Chinese factory, which could hinder its ability to deliver finished products.
Nexperia’s head office responded in a statement on Wednesday, saying the Chinese unit had refused to pay for the chips and accused it of “ignoring legal instructions” from its global management team. The company said it could not guarantee the quality of any chips delivered from its factory in China since October 13.
Modern cars rely on so-called discrete chips made by companies like Nexperia, which, unlike more advanced microprocessors, perform a single function. Leaders of major automakers expressed concerns in the latest round of earnings calls, saying finding a widespread replacement for Nexperia in the short term will be difficult.
“While Nexperia makes up only about 5% of the automotive discrete silicon market in terms of revenue, its share is much higher in terms of discrete wafer volume.”&P Global Mobility analysts wrote in a recent note.
They added that Nexperia parts are widely used across vehicle systems — often dozens to hundreds per vehicle — and that automakers in North America, Japan and South Korea are at risk.
“It’s an industry-wide problem. A quick breakthrough is really necessary to avoid fourth-quarter production losses for the entire industry,” Ford CEO Jim Farley said.
GM CEO Mary Barra warned that production could be affected. She said the company has “teams working around the clock with our supply chain partners to minimize potential disruptions.”
Nissan CEO Ivan Espinosa told CNBC that the company has set aside 25 billion yen ($163 million) for supply risk, partly to “accommodate” the impact of the Nexperia crisis on production.
Ola Källenius, CEO of Mercedes-Benz, said the company is “going around the world to look for alternatives.” The European Automobile Manufacturers Association said its members, including BMW, Renault, Volkswagen and Volvo, had to use up their reserve stock of chips and warned assembly lines would be halted if they ran out.
EU Trade Commissioner Maros Sefcovic on Saturday noted the “encouraging progress,” writing on X that the Chinese Ministry of Commerce had confirmed “further simplification” of export procedures for Nexperia chips to the EU and global customers.
In Beijing, the Ministry of Commerce also announced on Saturday that it had approved a Dutch request to send representatives to China for “consultations.”
But she noted that the Netherlands has not taken any concrete measures yet to restore the global semiconductor supply chain since the Dutch government said a few days ago that it would take “appropriate steps on our part when necessary.”
The Minister of Economic Affairs, Vincent Karremans, said in that statement, “The Netherlands is confident that chip supplies from China to Europe and the rest of the world will reach Nexperia customers in the coming days.”
Executive Vice President Noria Kihara told reporters on Friday that Honda had received a message that Nexperia shipments from China had resumed. The Japanese automaker expects to resume production during the week of Nov. 21 at its plant in Celaya, Mexico, which could produce up to 200,000 vehicles annually, he said.
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AP Business Writer Yuri Kajiyama in Tokyo contributed to this report.