Nexperia Cuts Wafer Supplies to China, Intensifying Chip Disruption
In late October, Dutch semiconductor manufacturer Nexperia announced a suspension of wafer supplies to its assembly facility in Dongguan, China. This decision raises concerns over potential chip shortages for automakers globally.
Nexperia’s Suspension of Wafer Supplies
On October 29, Nexperia’s interim CEO Stefan Tilger communicated via a customer letter that the suspension was effective as of October 26. The action stemmed from payment disputes related to contractual obligations not being met by local management.
Background of the Dispute
This suspension follows a significant change in Nexperia’s ownership and management. On September 30, the Dutch government intervened to take control of Nexperia from Wingtech Technology, its former Chinese owner. The Dutch government cited concerns about the potential appropriation of technology by Wingtech as a reason for the leadership change.
As a result, the Chinese unit of Nexperia resumed chip supplies but required transactions to be settled in the Chinese yuan rather than foreign currencies, such as the U.S. dollar.
Impact on the Semiconductor Market
Nexperia is a major supplier of chips used in the automotive and consumer electronics sectors. Approximately 70% of its chips produced in the Netherlands are packaged in China. This supply chain connection implies that the suspension could significantly disrupt production for various industries.
- Nexperia plans to develop alternative solutions to maintain supply to its customers.
- The company remains committed to resolving the issues with its Chinese unit.
- Nexperia is financially independent of Wingtech and does not rely on its capital.
Global Reactions and Future Prospects
The Dutch government is engaged in discussions with European governments and Chinese officials to seek a constructive resolution to this situation. As tensions rise, some automakers are taking precautions. For instance, Stellantis has created a dedicated team to monitor the issue.
Nissan stated that it has sufficient chip supplies to last until early November without disruptions. However, there has been a significant price increase for some Nexperia products, with costs rising from a few cents to two or three yuan each in recent weeks.
This ongoing situation highlights the fragility of global semiconductor supply chains and the challenges faced by companies and industries during disputes over ownership and operational control.
