Nexperia conflict spills overseas as it halts exports to China — German automotive manufacturers slow production due to semiconductor shortages from Dutch chipmaker

The fallout from the scuffle between the Dutch government and Chinese business interests over the ownership of Dutch chip firm, Nexperia, is starting to impact supply chains elsewhere in the world. A major supplier for automakers like Volkswagen and BMW has announced it's slowing production in Germany due to shortages of semiconductors from Nexperia, as per Bloomberg. Perhaps in an effort to reduce this impact, Nexperia has also announced it will be cutting wafer supplies to its Chinese facilities, according to Reuters.

The Dutch government took control of automotive and appliance chip maker Nexperia early in October, seizing it from its Chinese parent company. Various reasons for the move were cited, though it was eventually revealed that the US government had placed pressure on the Dutch to restrict Chinese influence, and that the then-CEO had been trying to use Nexperia funds to prop up his private chip fab in China.

Despite ongoing trade talks between the Trump administration and Chinese officials that are easing some international tensions, the fight over Nexperia control is still ongoing. Nexperia announced in a letter on October 29th had imposed a suspension on supplies to its plant in Dongguan, South China as "a direct consequence of the local management's recent failure to comply with the agreed contractual payment terms."

"While we have maintained shipments for as long as commercially feasible, continuing the current flow of supply from our front-end sites is no longer justifiable," the letter said.

"Unless these contractual obligations are fully satisfied, we cannot resume wafer supply to the site. Nexperia is developing alternative solutions to ensure (that) supply (is) continuing to our customers."

Meanwhile, in Germany, automotive supply firm ZF Friedrichshafen AG has reduced shifts on its main electric drivetrain plant. This plant supplies a range of major automakers, including Mercedes, Ford, BMW, and VW.

“Together with our customers and suppliers, we are working to keep supply chains that depend on Nexperia products stable and to assess alternative sourcing options,” said in response to a request for comment from Bloomberg.

This highlights how important each element in the semiconductor supply chain can be. Although Nexperia typically produces older chip designs that are far from the cutting-edge silicon we see produced by TSMC and Samsung, it still has an important part to play in major supply chains.

Indeed, if this situation isn't resolved, other global automakers are going to see impacts on their production schedules. Japanese automakers like Nissan and Toyota are said to be closely monitoring the situation, with Nissan saying it has enough internal stocks of chips to continue production as normal, but only until the first week of November.

Japanese automotive companies are said to be pushing towards standardizing their use of particular chips in order to help reduce the impact of shortages like this in the future.

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