A battle for control of a little-known chipmaker has threatened global auto production by choking off the semiconductor supply chain, though there are signs the crisis is inching toward a resolution.
The power struggle over Nexperia, a Chinese-owned Dutch semiconductor maker, highlights how technology supply chain vulnerabilities are squeezing auto makers, most notably forcing Honda to halt production at a Mexican factory making its popular HR-V crossover for North American markets. It also exposes how Europe is caught in the middle of the wider geopolitical showdown between Washington and Beijing.
Here’s a look at the dispute:
A surprise move
The turmoil erupted into public view in mid-October, when the Dutch government announced it had invoked a rarely used World War II-era law to take effective control of Nexperia weeks earlier.
The Dutch ministry of economic affairs said it took action because of national security concerns. Officials said they intervened because of “serious governance shortcomings” at Nexperia, asserting control to prevent the loss of crucial tech know-how that could threaten Europe’s economic security.
Nexperia’s Chinese owner Wingtech Technology, a partially state-owned company, is at the heart of the dispute. Amid the boardroom battle, a Dutch court granted the ministry’s request to oust Nexperia’s Chinese CEO Zhang Xuezheng. American officials told the Dutch government he would have to be replaced to avoid trade restrictions, according to a court filing.
What is Nexperia?
Nexperia makes simple semiconductors such as switches and logic chips. The auto industry — one of Nexperia’s biggest markets — uses its chips for numerous functions, such as adaptive LED headlight controllers, electric vehicle battery management systems and anti-lock brakes.
Headquartered in the Dutch city of Nijmegen, Nexperia was spun off from Philips Semiconductors two decades ago. It was eventually purchased by China’s Wingtech Technology in 2018 for $3.6 billion.
Nexperia has wafer fabrication plants in Britain and Germany. It operates an assembly and testing center in China’s southern manufacturing heartland of Guangdong — which accounts for around 70% of its end-product capacity — and similar centers in the Philippines and Malaysia.
Geopolitics
The dispute is part of the broader struggle between the U.S. and China over tech supremacy, which has left Europe caught in the middle.
It stems from Washington’s decision late last year to place Wingtech on its “entity list,” which subjects companies to export controls because of national security risks. In late September, the U.S. expanded that list to Wingtech’s subsidiaries, including Nexperia, pressuring allies to follow suit.
