Dutch chipmaker Nexperia has reportedly suspended wafer supplies to its Chinese assembly plant that may lead to a supply disruption and intensify a semiconductor crisis that has global automakers scrambling for solutions. Citing a letter sent to customers, news agency Reuters has reported that Nexperia interim CEO Stefan Tilger informed customers that the company had halted supplies to its facility in Dongguan, located in southern China’s Guangdong province, effective October 26.The suspension was “a direct consequence of the local management’s recent failure to comply with the agreed contractual payment terms,” according to the letter dated October 29 signed by Tilger.“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 stated.The company added that “unless these contractual obligations are fully satisfied, we cannot resume wafer supply to the site,” but said it is “developing alternative solutions to ensure (that) supply (is) continuing to our customers.”
What this critical supply chain block means for automakers
The implications for the automotive and electronics industries may be severe. Nexperia produces large volumes of chips in the Netherlands that are widely used across these sectors, Reuters said, adding that some 70% of the European-produced chips are packaged in China and sold mostly to distributors – making the Dongguan facility a critical link in the supply chain.Nexperia emphasised that the decision did not reflect an intention to withdraw from its Dongguan site or the Chinese market as a whole, adding that it remained committed to finding a resolution. The letter also noted that Nexperia is financially independent of Wingtech and does not raise capital from the Chinese company.Industry bodies have sounded the alarm over the potential impact on production. Stellantis said Thursday that it had established a “war room” to monitor the situation, while Japanese automaker Nissan indicated it had enough chips to last until the first week of November without disruption.The disruption comes as Nexperia finds itself at the centre of a deepening rift between Europe and China over semiconductor technology and national security concerns.The Dutch government seized control of Nexperia from its Chinese owner, Wingtech Technology, on September 30, also removing the company’s Chinese CEO amid concerns that its technology could be appropriated by Wingtech. Court filings revealed the seizure came as US pressure was mounting on Nexperia after Wingtech was placed on a restricted-export list, though Dutch authorities maintain that governance shortcomings triggered their intervention.In response, on October 4, the Chinese commerce ministry blocked Nexperia from exporting chips from China. The Chinese unit had resumed supplying semiconductors to local customers but changed its terms, stipulating that all sales to distributors must be settled in Chinese yuan rather than foreign currencies like the US dollar.
