Nexperia manufactures electronics, diodes and transistors, which are purchased in huge quantities by car companies. If the Chinese respond to this move by limiting their supplies from Asia, the automotive industry in Europe is in for another major crisis.
Photo: Nexperia
Chips and other electronics from Nexperia are purchased by European car manufacturers in huge quantities.
One disaster after another is falling on European car manufacturers. The latest issue is the Dutch government’s forcible takeover of semiconductor manufacturer Nexperia, which is owned by China’s Wingtech Group. It happened in mid-October. The measure is trying to be legalized by referring to the extraordinary mechanism to protect the availability of strategic goods, which, according to Hague, is supposed to protect the economic and technological security of the country and the Union.
Beijing has responded with restrictions of its own, complicating component flows and deepening uncertainty in European electronics and automotive supply chains. Industry unions and companies warn that without a quick political solution, the dispute may escalate into an acute risk of halting car production in Europe, which threatens several automakers.
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The Hague decision is unprecedented both in scope and in the instrument used. It allows the state to block or reverse the actions of Nexperia’s management if supplies are threatened or sensitive technologies are compromised. Nexperia does not make high-end processors, but ordinary chips, diodes, transistors and other electronic components that are purchased in huge quantities by car companies and manufacturers of industrial electronics. It is their mass, but inconspicuous presence in every vehicle or appliance that makes them a strategic product with a direct impact on the flow of production.
Shortly after the Dutch government’s intervention came export restrictions applied by Chinese authorities to components manufactured at Nexperia’s plants and its subcontractors. The company is seeking exemptions and maintaining dialogue with regulators on both continents to mitigate the impact on clients. The result is a “two-sided” grip, in which tighter oversight in Europe overlaps with administrative hurdles in China.
Automobile companies are watching the situation with growing nervousness. Experience from the recent chip crisis has shown that the failure of these “inconspicuous” components can stop lines just as effectively as missing batteries or motors. They are produced on specialized lines with limited capacity, their qualification is tied to strict safety standards, and replacing a massive production failure in their case is not a matter of weeks, but months.
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Although Nexperia has important production capacities in Europe, a significant part of the production is tested and finally processed in Asia. This is also why the Dutch government’s move causes uncertainty among car companies. If the Chinese block the supply of these components from Asia, then “Black Peter” will ultimately remain in the hands of automobile companies producing in Europe.
This dispute also shows how European car companies are dependent on the supply of certain critical raw material technologies from China, which has increased even more after the collapse of the only purely European battery manufacturer, Northvolt.
