Nexperia, a Netherlands-headquartered semiconductor company, has found itself at the center of a massive export control clash. The company has long been mired in controversy due to its ownership by Chinese firm Wingtech. The Dutch government nationalized Nexperia in October, arguing that there were “grave shortcomings in governance.” This action has the effect of making sure that Nexperia’s chips are still available when emergencies arise. The company produces important semiconductor inputs to auto manufacture and other product lines.
In a major game-changer, China has removed its export embargo on Nexperia chips. These chips have become essential to the manufacturing of cars. Recently, the Chinese government exempted exporters from licensing requirements. This holds true only if the items are identified as being for “civilian use.” The latest steps make it all but impossible to get Nexperia chips through export controls. This amendment makes it easier for them to be distributed.
Nexperia manufactures approximately 70% of its chips within Europe. These chips are then sent to China for final assembly before being re-exported back to countries around the world. Under China’s prior restrictions, the exports of the finished chips had been cut off, sparking alarm across the European automotive industry. The European Automobile Manufacturers’ Association (EMEA) sounded the alarm. They argued that without resolving the Chinese ban, Nexperia chip supplies would deplete in a matter of weeks, potentially devastating production lines across Europe.
Maros Sefcovic, the EU’s point man in EU-US trade negotiations, acknowledged the value of keeping up that dialogue.
“Close engagement with both the Chinese and Dutch authorities continues as we work towards a lasting, stable predictable framework that ensures the full restoration of semiconductor flows.” – Maros Sefcovic
The recent rollback of restrictive measures and subsequent actions have triggered a wider trade war between the US and China. These discussions have even extended to discussions of lifting the ban on Nexperia chip exports. This very positive announcement has raised expectations in the European automotive industry that the recovery will happen without too many bumps along the way.
Despite these advancements, China’s commerce ministry has recently signaled that efforts still need to be made to address deleterious governance practices. They underscored the need for the EU to continue to play a key role. This pressure will further push the Netherlands to address what they themselves have termed “erroneous practices” at Nexperia.