The dispute between Nexperia, a semiconductor company based in the Netherlands, and its Chinese counterpart is escalating. The Chinese subsidiary of Nexperia has further refused to comply with personnel orders from the headquarters. Volkswagen has announced that they are looking for an alternative supplier to compensate for potential semiconductor shortages.
Recently, the Dutch headquarters announced the dismissal of John Chang, the Vice President of Sales and Marketing. On Thursday, October 23, Nexperia’s Chinese subsidiary, known as Nexperia China, stated that they do not recognize the personnel decision from the Dutch headquarters and will continue to maintain John Chang’s position as Vice President of Sales and Marketing.
In an internal memo released on Thursday evening, Nexperia China stated that the personnel decision from the Dutch headquarters does not have legal validity in China, and John Chang’s position remains unchanged. They emphasized that John Chang’s actions within his scope of authority represent Nexperia China.
The statement also mentioned that all business activities, production operations, and external collaborations of Nexperia China are not affected by any unilateral decisions from the outside.
The Dutch headquarters of Nexperia declined to comment on this development. Previously, they strongly opposed an internal memo released by Nexperia China, stating that claims in the memo about “abandoning the Chinese market” and the independent operation of Chinese factories are untrue.
Concerned about the risk of Nexperia’s chip technology being stolen back to mainland China by its parent company, the publicly listed company Wingtech, the Dutch government temporarily took over Nexperia for a year at the end of September. They have prohibited Nexperia and its subsidiaries from making any adjustments to assets, intellectual property, business, and personnel within the year. The Dutch government accused Wingtech CEO Jack Zhang of violating the agreement, threatening the economic and national security of the EU.
In retaliation, the Chinese Ministry of Commerce has imposed comprehensive restrictions on the export of Nexperia’s finished chips, causing worry among European car manufacturers who rely on these products.
According to reports from Reuters on Thursday, Nexperia China has resumed supplying chip products to local distributors, but only for domestic trade. All sales are required to be settled in Renminbi, whereas previously transactions were conducted in foreign currencies such as the US dollar.
Nexperia is the world’s largest supplier of discrete semiconductors, such as diodes and transistors. Production is carried out in Europe, with further packaging and processing done in China.
The Dutch headquarters have cautioned Chinese customers that they cannot guarantee the quality of products manufactured by the Chinese subsidiary.
On October 21, Chinese Minister of Commerce Wang Wentao held a call with Dutch Minister of Economic Affairs Vincent Karremans, but no mutual agreement was reached to resolve the Nexperia deadlock.
The basic chips produced by Nexperia are widely used in automotive electronic systems, controlling various equipment from lighting and airbag systems to door locks and windows.
Although not considered as cutting-edge chips, the high production volume means that neither Nexperia headquarters nor Nexperia China can find alternative partners in a short period.
Volkswagen has stated that they are likely to avoid production stoppages caused by semiconductor shortages. Christian Vollmer, the Director of Production for the company, mentioned to the German newspaper “Handelsblatt,” “We have an alternative supplier that may be able to compensate for the temporary suspension of supplies from Nexperia.”
He indicated that negotiations are ongoing with an alternative supplier but did not disclose the name of the company.
Nexperia was sold to a Chinese consortium in 2017 and later acquired by the Chinese company Wingtech Technology Group in 2019.