A battle for control of a little-known chipmaker has threatened global auto production by choking off the semiconductor supply chain, though there are signs the crisis is inching toward a resolution.
The power struggle over Nexperia, a Chinese-owned Dutch semiconductor maker, highlights how technology supply chain vulnerabilities are squeezing auto makers, most notably forcing Honda to halt production at a Mexican factory making its popular HR-V crossover for North American markets. It also exposes how Europe is caught in the middle of the wider geopolitical showdown between Washington and Beijing.
Here’s a look at the dispute:
A surprise move
The turmoil erupted into public view in mid-October, when the Dutch government announced it had to take effective control of Nexperia weeks earlier.
The Dutch ministry of economic affairs said it took action because of national security concerns. Officials said they intervened because of 鈥渟erious governance shortcomings鈥� at Nexperia, asserting control to prevent the loss of crucial tech know-how that could threaten Europe’s economic security.
Nexperia鈥檚 Chinese owner Wingtech Technology, a partially state-owned company, is at the heart of the dispute. Amid the boardroom battle, a Dutch court granted the ministry’s request to oust Nexperia’s Chinese CEO Zhang Xuezheng. American officials told the Dutch government he would have to be replaced to avoid trade restrictions, according to a court filing.
What is Nexperia?
Nexperia makes simple semiconductors such as switches and logic chips. The auto industry 鈥� one of Nexperia’s biggest markets 鈥� uses its chips for numerous functions, such as adaptive LED headlight controllers, 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 China’s Wingtech Technology in 2018 for $3.6 billion.
Nexperia has wafer fabrication plants in Britain and Germany. It operates an assembly and testing center in China’s southern manufacturing heartland of Guangdong 鈥� which accounts for around 70% of its end-product capacity 鈥� and similar centers in the Philippines and Malaysia.
Geopolitics
The dispute is part of the broader struggle between the U.S. and China over tech supremacy, which has left Europe caught in the middle.
It stems from Washington鈥檚 decision late last year to place Wingtech on its 鈥渆ntity list,” which subjects companies to export controls because of national security risks. In late September, the U.S. expanded that list to Wingtech鈥檚 subsidiaries, including Nexperia, pressuring allies to follow suit.
After the Dutch government asserted control of Nexperia, Beijing responded soon after, blocking the export of Nexperia chips from its assembly plant in the Chinese city of Dongguan. It blamed the Netherlands for 鈥渢urmoil and chaos鈥� in the chip supply chain.
There were signs of hope following last month’s high-profile meeting between U.S. President Donald Trump and Chinese leader Xi Jinping, when the White House said Beijing would ease the export ban as part of a U.S.-China trade truce.
Despite Beijing also confirming exports would be allowed to resume, Nexperia鈥檚 Chinese unit said headquarters used to make chips to its Chinese factory, potentially crimping its ability to deliver finished products.
Nexperia鈥檚 head office hit back in a statement Wednesday, saying the Chinese unit refused to pay for the wafers and accused it of 鈥渋gnoring the lawful instructions” from its global management team. The company said it can鈥檛 guarantee the quality of any chips delivered from its China plant since Oct. 13.
Auto disruption
Modern automobiles rely on so-called discrete chips made by companies like Nexperia, which, unlike more advanced microprocessors, perform a single function. Leaders at big carmakers spelled out their worries in the latest round of earnings calls, saying that finding a replacement for Nexperia at scale in the short term will be difficult.
鈥淲hile Nexperia makes up only about 5% of the automotive silicon discrete market in term of revenue, its share is much higher in terms of discrete chip volume,鈥� S&P Global Mobility analysts wrote in a recent note.
Nexperia鈥檚 parts are widely used across vehicle systems 鈥� often dozens to hundreds per vehicle 鈥� and carmakers in North America, Japan and South Korea are at risk, they added.
鈥淚t鈥檚 an industrywide issue. A quick breakthrough is really necessary to avoid fourth quarter production losses for the entire industry,鈥� Ford CEO Jim Farley said.
General Motors CEO Mary Barra warned that production could be hit. The company has 鈥渢eams working around the clock with our supply chain partners to minimize possible disruptions,鈥� she said.
Nissan CEO Ivan Espinosa told CNBC that the company is setting aside a 25 billion yen ($163 million) provision for supply risks, in part to 鈥渁bsorb鈥� the impact from the Nexperia crisis on production.
Mercedes-Benz is 鈥渟currying around the world to look for alternatives,鈥� CEO Ola Kallenius said. The European Automobile Manufacturers鈥� Association said members including BMW, Renault, Volkswagen and Volvo have been forced to use their reserve stockpiles of chips and warned of assembly line stoppages if they run out.
Resolution
The European Union鈥檚 trade commissioner, Maros Sefcovic, on Saturday noted 鈥渆ncouraging progress,” writing on X that China’s Commerce Ministry had confirmed 鈥渇urther simplification鈥� of export procedures for Nexperia chips to the EU and global customers.
In Beijing, the Commerce Ministry also said Saturday that it agreed to a Dutch request to send representatives to China for “consultations.”
But it noted that the Netherlands had not taken any concrete actions yet to restore the global semiconductor supply chain since the Dutch government said days earlier it would take 鈥渁ppropriate steps on our part where necessary.”
Economics Affairs Minister Vincent Karremans had said in that statement that “the Netherlands trusts that the supply of chips from China to Europe and the rest of the world will reach Nexperia鈥檚 customers over the coming days.鈥�
Honda has received word that Nexperia’s shipments from China have resumed, Executive Vice President Noriya Kaihara told reporters Friday. He said the Japanese automaker expects to resume production during the week of Nov. 21 at its plant in Celaya, Mexico, which can make up to 200,000 vehicles a year.
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AP Business Writer Yuri Kageyama in Tokyo contributed to this report.
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