Automotive alarm: “Without Nexperia chips imminent stop in production.” EU mediates between China and Netherlands

Brussels – The complex dispute between the Netherlands and China over Nexperia, the chip manufacturer based in Nijmegen, the Netherlands, but partly controlled by the Chinese government, risks disrupting European car production. The alarm, one month after Beijing’s export ban on chips, comes directly from ACEA, the association that brings together the EU automotive industry, which is increasingly concerned about the “imminent” halt to assembly lines.  The European Commission is mediating between the two governments and assured today that it is “trying to find a solution as a matter of urgency.” 

The affair dates back more than a month, when the Hague government decided to take control of Nexperia due to fears that the company was dismantling its operations on the old continent to transfer production to China. According to Reuters, the then-CEO, Zhang Xuezheng, who is also the founder of the Chinese parent company Wingtech Technology, planned to lay off 40 per cent of the staff in Europe and to close a research and development centre in Munich. Earlier, the CEO reportedly transferred chip designs and machine settings from the company’s factory in Manchester to a Wingtech factory in China. 

At the end of September, a Dutch court suspended Xuezheng, and the national government took control of the company. In response, the Chinese Ministry of Commerce blocked the export of the company’s products out of China on 4 October. The problem is, first, that Nexperia’s chips are widely used in car electronics systems. Moreover, although most of Nexperia’s chips are produced in Europe, about 70 per cent are packaged in China before distribution. 

After a month-long stalemate, ACEA denounced today (29 October) in a press release, in the face of “a political dispute that remains unresolved,” a situation that “is becoming more critical every day for global automotive production.” The industry, explained the Association of the EU’s largest manufacturers, “is currently drawing on reserve stocks, but supplies are rapidly dwindling.” 

The interruption of assembly lines “could only be a matter of days,” warned Sigrid de Vries, Director General of ACEA. Some members of the Association reported that “component supplies have already been interrupted due to the shortage.” De Vries urged “all parties involved to redouble their efforts to find a diplomatic way out of this critical situation.” 

The issue has been on the table of the European Trade Commissioner, Maroš Šefčovič, for weeks. In recent days, Sefčovič has reportedly been in contact “with both Chinese and Dutch officials,” confirmed European Trade Commission spokesman Olof Gill. Tomorrow, a delegation of Chinese government technicians will arrive in Brussels for a face-to-face meeting with EU executive officials on another crisis: restrictions on the export of rare earths from China. “I imagine that this topic will also be raised there,” the spokesman said, “but we reiterate that we are in contact with both sides and that we are trying to find a solution as a matter of urgency.”