(Oct 31): Nexperia halted supplies to its China factory over disagreements with the site’s management, potentially escalating the standoff that’s already impacting automotive production in Europe and beyond.
The Nijmegen, Netherlands-based chipmaker sent a letter this week to customers notifying them that they would stop sending wafers to its plant in Dongguan, China. The site is one of the largest of its kind in the world and accounted for about half of the Nexperia’s supply before the crisis.
“We have maintained shipments for as long as commercially feasible, yet continuing the current flow of supply to the site in Dongguan is no longer justifiable,” a Nexperia spokesperson, said in an emailed statement on Friday.
The Dutch caretaker government assumed veto powers over Nexperia in late September due to concerns that Chinese owner Wingtech Technology Co was hobbling the chipmaker and threatening the supply of key components. The ministry of economic affairs has said it intervened because actions of Wingtech’s founder Zhang Xuezheng posed a threat to the Dutch company’s viability.
The supply disruption from the dispute is already having impacts in Europe, with a key supplier reining in production of components for major automakers such as Volkswagen AG and BMW AG.
Zhang was suspended as Nexperia CEO by an Amsterdam court on Oct 7 following a petition by the company’s management. Wingtech on Thursday demanded that the 50-year-old Zhang be reinstated to resolve the dispute. It also rejected allegations it was stealing technology. Wingtech did not immediately respond to an email seeking comment.
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The spat has heightened tensions between Europe and China, which imposed export restrictions on the Chinese facility following the Dutch government’s move to take veto powers over Nexperia. That meant that although the wafers were being delivered to the Dongguan site, the chips weren’t being delivered to customers outside China.
The Dutch manufacturer provides high volumes of transistors and logic chips that are used across the automotive and consumer electronics industries. It operates wafer fabrication plants in Germany and the UK. Aside from the assembly and testing site in China, it also has facilities in the Philippines and Malaysia.
ZF Friedrichshafen AG, a key automotive supplier, is reducing production in Germany due to a semiconductor shortage sparked by the conflict over Nexperia, according to people familiar with the matter.
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ZF has cut shifts at its main electric drivetrain plant in Schweinfurt because the availability of important components has tightened, the people said, asking not to be identified because the information isn’t public. The company supplies most major automakers, including Mercedes-Benz, Stellantis and Ford.
The site, which employs roughly 8,000 workers, is one of the company’s most important globally. It’s the lead plant making electric motors and also produces chassis and driveline systems used in combustion-engine as well as electric vehicles.
“Together with our customers and suppliers, we are working to keep supply chains that depend on Nexperia products stable and to assess alternative sourcing options,” a ZF spokesperson said in an emailed statement in response to questions. They declined to comment further.
Nexperia said it notified customers of the issues “because local management has not been honoring the agreed contractual arrangements,” the spokesperson said.
“Shipments will be resumed once all contractual obligations are fully satisfied once again,” according to the statement. The news about supply suspension was earlier reported by Reuters.
Uploaded by Lam Seng Fatt
