A battle for control of a little-known chipmaker has threatened global auto production by choking the semiconductor supply chain, although there are signs the crisis is moving toward resolution.
The power struggle over Nexperia, a Chinese-owned Dutch semiconductor maker, highlights how vulnerabilities in the technology supply chain are weighing on automakers, most notably forcing Honda to halt production at a Mexican plant that makes the popular HR-V crossover for North American markets. It also shows how Europe has found itself at the center of a broader geopolitical standoff between Washington and Beijing.
Here's a look at the controversy:
The unrest became public in mid-October when the Dutch government announced that it had ceased operations. referred to a rarely used World War II law to take effective control of Nexperia a few weeks earlier.
The Dutch Ministry of Economic Affairs said it took the action due to national security concerns. Officials said they intervened due to “serious management deficiencies” at Nexperia, installing controls to prevent the loss of critical technological know-how that could jeopardize Europe's economic security.
At the center of the dispute is Nexperia's Chinese owner Wingtech Technology, a partly state-owned company. In a boardroom battle, a Dutch court granted the ministry's request to fire Nexperia's Chinese CEO Zhang Xuezheng. According to court filings, U.S. officials told the Dutch government it would have to be replaced to avoid trade restrictions.
Nexperia produces simple semiconductors such as switches and logic chips. The automotive industry, one of Nexperia's largest markets, uses its chips for a variety of functions such as adaptive LED headlight controllers, electric vehicle battery management systems and anti-lock brakes.
Nexperia, headquartered in the Dutch city of Nijmegen, split from Philips Semiconductors two decades ago. It was eventually bought by Chinese company Wingtech Technology in 2018 for $3.6 billion.
Nexperia has wafer manufacturing plants in the UK and Germany. The company operates an assembly and testing center in China's southern manufacturing hub of Guangdong, which accounts for about 70% of its end-product manufacturing capacity, as well as similar centers in the Philippines and Malaysia.
The dispute is part of a broader battle between the US and China for technological supremacy that has placed Europe at the center of the conflict.
It stems from Washington's decision late last year to add Wingtech to its “entity list,” which subjects companies to export controls due to national security risks. In late September, the US expanded the list to include Wingtech subsidiaries, including Nexperia, pressuring its allies to follow suit.
After the Dutch government took control of Nexperia, Beijing soon responded by blocking the export of Nexperia chips from its assembly plant in the Chinese city of Dongguan. He accused the Netherlands of causing “disarray and chaos” in the chip supply chain.
Following a high-profile meeting between US President Donald Trump and Chinese leader Xi Jinping last month, there were signs of hope when the White House said Beijing would ease an export ban as part of a trade truce between the US and China.
Although Beijing also confirmed that exports would be allowed to resume, Nexperia's Chinese unit said at its headquarters. waffle supplies suspended used to produce chips at its Chinese plant, potentially limiting its ability to supply finished products.
Nexperia's head office responded in a statement on Wednesday, saying the Chinese unit had refused to pay for the wafers and accused it of “ignoring the lawful instructions” of its global management team. The company said it could not guarantee the quality of chips shipped from its factory in China since October 13.
Modern cars rely on so-called discrete chips made by companies such as Nexperia, which, unlike more advanced microprocessors, perform a single function. Executives at major automakers voiced their concerns during the latest round of earnings calls, saying finding a large-scale replacement for Nexperia would be difficult in the short term.
“Although Nexperia has only about 5% of the automotive discrete semiconductor market in terms of revenue, its share is much higher in terms of discrete chip volume,” S said.&P Global Mobility analysts wrote in a recent note.
Nexperia parts are used widely in vehicle systems – often tens to hundreds per vehicle – and automakers in North America, Japan and South Korea are at risk, they added.
“This is an industry-wide issue. A fast breakthrough is really needed to avoid industry-wide production losses in the fourth quarter,” Ford CEO Jim Farley said.
General Motors CEO Mary Barra warned that production could be affected. The company has “teams working around the clock with our supply chain partners to minimize potential disruptions,” she said.
Nissan CEO Ivan Espinosa told CNBC that the company is setting aside a reserve of 25 billion yen ($163 million) to cover supply risks, in part to “absorb” the impact of the Nexperia crisis on production.
Mercedes-Benz is “scurrying around the world looking for alternatives,” said CEO Ola Källenius. The European Automobile Manufacturers Association said its members, including BMW, Renault, Volkswagen and Volvo, were being forced to use their reserve stocks of chips and warned of halting assembly lines if they ran out.
European Union Trade Commissioner Maros Sefcovic noted “encouraging progress” on Saturday, writing on X that China's Ministry of Commerce has confirmed “further simplification” of procedures for exporting Nexperia chips to the EU and global customers.
Beijing's Commerce Ministry also said on Saturday that it had agreed to a Dutch request to send representatives to China for “consultations.”
But it noted that the Netherlands had yet to take any concrete action to restore the global semiconductor supply chain, as the Dutch government had said days earlier that it would take “appropriate steps on our part where necessary.”
Economy Minister Vincent Karremans said in a statement that “the Netherlands hopes that chip shipments from China to Europe and the rest of the world will reach Nexperia customers in the coming days.”
Honda has received word that Nexperia deliveries from China have resumed, Executive Vice President Noriya Kaihara told reporters on Friday. He said the Japanese automaker expects to resume production during the week of Nov. 21 at its plant in Zelaya, Mexico, which can produce up to 200,000 vehicles a year.
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AP Business Writer Yuri Kageyama in Tokyo contributed to this report.
