The recent battle for control of Nexperia, a lesser-known chipmaker, has caused a stir in the global auto industry by disrupting the semiconductor supply chain. This crisis has had significant repercussions, with Honda being forced to halt production at a plant in Mexico that manufactures the popular HR-V crossover for North American markets. The power struggle over Nexperia, a Dutch semiconductor maker owned by a Chinese company, Wingtech Technology, sheds light on the vulnerabilities in technology supply chains that are impacting automakers worldwide. It also underscores the broader geopolitical tensions between the United States and China, with Europe finding itself caught in the middle of this showdown.
The dispute over Nexperia came to light in mid-October when the Dutch government invoked a rarely used World War II-era law to take control of the company due to national security concerns. The Dutch ministry of economic affairs cited serious governance issues at Nexperia and the need to prevent the loss of critical technological know-how that could jeopardize Europe’s economic security. This move led to a court decision to remove Nexperia’s Chinese CEO, Zhang Xuezheng, at the request of American officials to avoid trade restrictions.
Nexperia, based in Nijmegen, Netherlands, specializes in producing simple semiconductors like switches and logic chips that are essential components in various automotive applications. The company, originally a spin-off from Philips Semiconductors, was acquired by Wingtech Technology in 2018 for $3.6 billion. Nexperia operates manufacturing facilities in the UK, Germany, China, the Philippines, and Malaysia, with its Guangdong plant in China being a significant hub for production.
The conflict surrounding Nexperia is part of the larger battle for tech supremacy between the US and China, with Europe finding itself embroiled in the middle. The US decision to place Wingtech on its entity list due to national security risks has had cascading effects, leading to export controls on Nexperia and its subsidiaries. This pressure has caused disruptions in the chip supply chain, prompting retaliatory actions from China, including blocking the export of Nexperia chips from its Dongguan plant.
Despite the tensions, there are signs of progress towards resolving the crisis. Following a high-profile meeting between US President Donald Trump and Chinese leader Xi Jinping, Beijing agreed to ease the export ban on Nexperia chips as part of a trade truce. However, challenges remain as Nexperia’s Chinese unit suspended shipments of wafers used in chip production, raising concerns about the company’s ability to meet demand.
The auto industry is feeling the impact of the Nexperia crisis, as many carmakers depend on its discrete chips for various vehicle systems. Companies like Ford, General Motors, Nissan, and Mercedes-Benz are scrambling to find alternatives to avoid production losses in the fourth quarter. The European Automobile Manufacturers’ Association has warned of potential assembly line stoppages if the chip supply chain disruptions persist.
Efforts are underway to resolve the situation, with the European Union’s trade commissioner noting progress in export procedures for Nexperia chips to the EU and global customers. China has agreed to consultations with Dutch representatives, but concrete actions are needed to restore the semiconductor supply chain fully. Honda has received confirmation that Nexperia’s shipments from China have resumed, allowing the automaker to resume production at its Mexican plant.
In conclusion, the Nexperia crisis highlights the interconnectedness of the global supply chain and the risks associated with geopolitical tensions in the tech industry. As stakeholders work towards a resolution, the auto industry remains vigilant in mitigating potential disruptions and ensuring a stable supply of essential components like semiconductor chips.
