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A swift resolution of the Sino-Dutch row over the control of Chinese-owned, Netherlands-based chipmaker Nexperia is not likely, according to analysts, which means semiconductor supplies for the global car industry remain uncertain. That assessment comes a day after China’s Ministry of Commerce accused The Hague of “going its own way, without taking concrete steps to resolve the issue”, even as the mainland regulator considered exempting some Nexperia orders from an export ban that it imposed last month on the firm’s China unit. Nexperia China, meanwhile, said it aimed to secure alternative foundry sources for processed wafers, as the European fabrication facilities under the Dutch chipmaker’s head office continue to suspend wafer supplies to its factory in Dongguan, in southern Guangdong province. The China unit assembles 70 per cent of all the chipmaker’s products. “As none of the parties want to appear to be making concessions prematurely, progress towards a resolution is bound to be gradual rather than immediate,” said Zhao Zhijiang, an assistant researcher at the Beijing-based think tank Anbound. “This process will not be swift”, Zhao added, as Chinese President Xi Jinping and his counterpart, Donald Trump, last week reached a trade truce to de-escalate tensions. That deal included postponing a rule announced on September 29 that blacklisted majority-owned subsidiaries of Chinese companies on Washington’s Entity List. Nexperia is owned by Wingtech Technology, which was added to the US trade blacklist in December last year. Still, The Hague cited the Chinese CEO’s mismanagement and national security concerns as reasons for seizing control of Nexperia on September 30. A prolonged impasse in the Nexperia dispute would likely expose how global car industry supply chains remain vulnerable, following the semiconductor shortage during the Covid-19 pandemic. Nexperia supplies chips to nearly every major European carmaker, as well as those from Japan and the US. It supplies so-called legacy chips used for basic applications such as power windows, lights, sensors and airbags. The US car industry, for example, relies almost entirely on legacy chips, which accounted for 95 per cent of its total semiconductor consumption, according to a 2023 report by the think tank Centre for Strategic and International Studies. Business advisory AutoForecast Solutions estimated that the previous chip shortage cost the car industry production of more than 17 million vehicles worldwide from 2021 through 2023. “While the immediate threat to auto supply chains may have been defused by the Trump-Xi agreement, the final resolution of Nexperia’s fate will require further negotiation between Dutch or EU officials and China,” Gavekal analysts Laila Khawaja, Damien Ma and Tom Hancock said in a research note published this week. “China will have the preponderance of leverage” in those talks, the analysts said. They pointed out that Nexperia’s China unit had “effectively defied the seizure of its parent company and resumed sales to Chinese clients, presumably fabricating at WingSkySemi”. Formally known as Shanghai Dingtai Jiangxin Technology, WingSkySemi is a sister company of Wingtech, the Chinese owner of Nexperia. It runs a 12-inch wafer fabrication facility in Shanghai. EU trade spokesman Olof Gill, meanwhile, said recent constructive dialogue between China and the Netherlands helped “avoid a worst-case scenario” for Nexperia chip supplies, according to a Post report on Tuesday. Still, Wingtech is widely expected to take legal action to contest The Hague’s decision to seize control of Nexperia. The Chinese firm recently named experienced general counsel Sophie Shen Xinjia as its president. Her appointment reflected Wingtech’s current need to overcome issues surrounding Nexperia, which Dutch authorities seized control of under an obscure 1952 law known as the Goods Availability Act.
