Dutch chipmaker Nexperia says it hopes to resolve recent ownership crisis but cannot guarantee quality of chips from its Chinese facilities since 13 October.
While Dutch chipmaker Nexperia says it expects to resolve the crisis over company ownership soon, it also said it could not guarantee its products made in China after 13 October are authentic and meet quality standards. In a public statement yesterday (5 November), the chipmaker sought to reassure customers and shareholders, but also added the warning.
There have been concerns around disruption to the supply chain, in particular for carmakers, since the Dutch government said in October it had taken control of the Chinese-owned chipmaker Nexperia, citing a “threat” to Europe’s semiconductor capabilities.
At the time, the country’s Ministry of Economic Affairs invoked the Goods Availability Act for the first time, pointing to “serious governance shortcomings” at Nexperia. The Act’s usage is “highly exceptional”, it said in its statement.
It meant decisions made at Nexperia could be blocked or reversed by the Dutch government if they were deemed “harmful” to the company or its future as a Dutch and European business, as well as to preserve it as a crucial part of Europe’s semiconductor value chain.
The Dutch-headquartered Nexperia – an offshoot of NXP – was acquired by China’s contract manufacturing giant Wingtech Technology in 2018.
Last year, the US government added Wingtech to its Entity List – a designation given to companies that could pose a risk to the country’s national security. In 2022, the UK government ordered Wingtech-owned Nexperia to undo its acquisition of the Newport Wafer Fab, citing a national security risk.
In yesterday’s statement, Nexperia said it welcomed China’s commitment to facilitate the resumption of exports from Nexperia’s Chinese facility and that of its subcontractors, “enabling the continued flow of critical legacy chips to global markets”, but added it awaited further details on conditions, criteria and procedures.
However it also said that “despite these positive steps”, Nexperia’s entities in China had stopped operating within the established corporate governance framework and are “ignoring the lawful instructions of Nexperia BV’s global management”, and therefore it lacked oversight of its facilities there.
“Given the missing transparency and oversight over the manufacturing processes we cannot guarantee the intellectual property, technology, authenticity and quality standards for products delivered from the Nexperia facility in China as of October 13,” it said.
Nexperia also said it had suspended direct supply of wafers to its facility in China at the end of October, after Nexperia China’s refusal to pay for them. It says it is working urgently to identify and implement viable alternatives.
“We are offering alternative supply chain solutions to mitigate disruption and maintain continuity of delivery as much as possible,” it said. “All other Nexperia sites – including those in Europe and other parts of Asia – continue to operate as normal.”
Nexperia said it remained confident that a “de-escalation” could be achieved soon and that it remains fully committed to its Chinese operations which it says are essential to its long-term strategy and success.
Headquartered in the Netherlands, Nexperia is a global semiconductor company with over 12,500 employees across Europe, Asia, and the US, and supplies chips globally, shipping more that 100 billion products annually.
It specialises in power chips used by a myriad of carmakers for everything from wing mirrors to central locking. As a result, European and Japanese carmakers have been warning that the ongoing dispute could have a major impact on their ability to deliver. Volvo, Volkswagen, Honda and Nissan have all said that the Nexperia crisis could hit car production if not resolved quickly.
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