The Dutch Government is prepared to suspend the control it exercises over the semiconductor manufacturer Nexperia if China again allows the export of its most critical chips. According to sources Bloomberg, the Chinese government has already lifted the veto, so the move would end a conflict that threatened to paralyze automobile production world.
The agreement on the table. According to Bloomberg, Dutch authorities were “prepared to revoke the ministerial order that gave them veto power over key Nexperia corporate decisions” as soon as next week. The condition: that the resumption of shipments of components from China be verified in the coming days and that the financial disputes between Nexperia and its Chinese operations be also resolved.
China lifts veto. Just like assures In the middle, China has once again allowed Nexperia to export its semiconductors, paving the way for the Netherlands to suspend its powers over the Chinese-owned company. Chips have already started shipping again from Nexperia’s Chinese operations, officials from several auto companies confirmed to Bloomberg.
The first shipments are already underway. Aumovio SE, a components maker that supplies Volkswagen, Stellantis and BMW, has shipped Nexperia semiconductors and components containing them after receiving an export license from China this week, according to declared its CEO Philipp Von Hirschheydt to Bloomberg.
The manager added who informed him that the Chinese Ministry of Commerce lifted the export ban on Nexperia this Friday. “It will take some time before all procedures and processes return to normal,” the CEO warned. There is still the possibility of disruption in the next four to six weeks, but “if everything I know today is correct, we are not going to be affected,” he said.
How it all started. The Dutch Minister of Economic Affairs, Vincent Karremans, activated a law dating back to the Cold War in September to take temporary control over Nexperiaowned by the Chinese technology group Wingtech. The reason was concern that Wingtech was weakening the company and putting the supply of vital components at risk.
The Dutch government flagged some of Wingtech founder Zhang Xuezheng’s decisions as representing “misuse of financial resources for the personal enrichment of the CEO,” according to account Bloomberg. Wingtech denied these allegations. In response, Beijing imposed restrictions on exports of Nexperia products from China, which accounted for about half of the company’s pre-crisis volumes.
Why does it matter? Nexperia makes power control chips used by large manufacturers such as Volkswagen. Until the conflict is resolved, European car manufacturers face production stoppages imminent as their reserves are depleted.
Just like account Bloomberg, Honda Motor has already been informed of the resumption of chip shipments by Nexperia in China, so the Japanese carmaker plans to normalize its affected production during the week of November 21, according to its executive vice president, Noriya Kaihara.
On the other hand, Bosch, one of the largest component suppliers in the world, also is receiving chips from Nexperia from China, according to sources close to the media. However, the media reports that until this Friday morning there were still production interruptions in several Bosch plants that manufacture automotive electronics.
The situation remains tense. Despite positive signs, German supplier ZF Friedrichshafen is preparing for production interruptions, including temporary layoffs, as a precautionary measure. “It is unclear to what extent and at what speed deliveries from China could resume,” declared a company spokesperson told Bloomberg. “The situation remains very tense throughout the industry.”
Signs of distension. The Dutch Government declared this Thursday that it expects Nexperia’s Chinese unit to resume chip supplies in the coming days. “Given the constructive nature of our discussions with the Chinese authorities, the Netherlands is confident that chip supplies from China to Europe and the rest of the world will reach Nexperia customers in the coming days,” Karremans said in a statement picked up by Bloomberg.
Wingtech shares rose almost 10% in Shanghai after the news. European automakers and their suppliers also gained on the news, as Volkswagen shares rose as much as 2.7% in Frankfurt, while BMW rose as much as 2.5%. Shares of Mercedes-Benz Group and Stellantis also rose, according to the middle.
What’s coming now. Resolution of the dispute will depend on effective verification that shipments resume and resolving outstanding financial issues between Nexperia and its operations in China. If these conditions are met, the Dutch Government could revoke his powers of intervention next week, putting an end to a crisis that has put the entire supply chain of the European automotive sector in check.
On the other hand, the future of Wingtech founder Zhang Xuezheng remains uncertain following his suspension as CEO of Nexperia by an Amsterdam court on October 7.
Cover image | Arthur Wang and Nexperia
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