Dutch Ready to Drop Nexperia Control If Chip Supply Resumes

Patrick Van Oosterom
5–6 minutes

The Netherlands is prepared to suspend its powers over Chinese-owned chipmaker Nexperia in a move that would de-escalate a fight with Beijing that threatens to disrupt automotive production around the world.

The Dutch government is ready to shelve the ministerial order that gave it the power to block or change key corporate decisions at Nexperia, if China allows exports of its critical chips again, according to people familiar with the matter.

If the shipment of supplies resumes and is verified in the coming days, the Dutch are willing to revoke its powers as soon as next week, said the people, who spoke on the condition of anonymity. Financial issues between Nexperia and its Chinese operations would also need to be resolved.

Shares of Wingtech Technology Co., the China-based parent of Nexperia, surged in the final minutes of trading to close nearly 10% higher in Shanghai. Shares in Volkswagen AG — Europe’s largest carmaker and one of the companies most exposed to the supply disruption — rose as much as 1.3% in early trading in Frankfurt, helping to drive gains in the Stoxx 600 Automobiles & Parts Index of 0.7%

In a sign of easing tensions, the Dutch government said in a statement late Thursday that it expects Nexperia’s Chinese unit to resume chip supplies in the coming days.

“Given the constructive nature of our talks with the Chinese authorities, the Netherlands trusts that the supply of chips from China to Europe and the rest of the world will reach Nexperia’s customers over the coming days,” Dutch Economic Affairs Minister Vincent Karremans said in the statement.

A spokesperson from the economic affairs ministry declined to comment further on the situation.

Karremans effectively instigated the dispute when he invoked a Cold War-era law in late September to give the government powers over Nexperia’s decisions.

Nexperia Spat Was Long in the Making


Nexperia CEO ousted by Dutch court; China restricts exports of Nexperia chips
Source: Bloomberg research; Amsterdam Court of Appeal filing
The cabinet member in the Netherlands’ caretaker administration cited concerns that Wingtech was hobbling the chipmaker and threatening the supply of vital components, pointing to actions by Wingtech founder Zhang Xuezheng that represented a “misuse of financial resources for the CEO’s self-enrichment as well as his other companies in China.”

Wingtech has denied those claims and demanded that Zhang get reinstated as Nexperia’s chief executive officer after he was suspended by an Amsterdam court on Oct. 7 following a petition by management.

The intervention gave the Dutch state the right to block or change key decisions, including the relocation of company parts or the dismissal of executives for as long as a year. Beijing retaliated by imposing restrictions on exports of Nexperia’s products from China, which accounted for about half of the company’s pre-crisis volumes.

The Dutch unit supplies power-control chips used by major automakers, including VW. It notified customers on Oct. 29 that it was halting the direct supply of wafers to its assembly plant in China over disputes about payments and control.

Without a resolution to the dispute, European automakers face production stoppages within days as reserves dwindle, the industry’s main lobby group warned.

But there are signs that the supply crunch is easing. Honda Motor Co. has been told Nexperia’s chip shipments in China have resumed, and the carmaker aims to get disrupted production back on track during the week of Nov. 21, Executive Vice President Noriya Kaihara said on Friday.

https://www.bloomberg.com/news/artic...supply-resumes


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