Following the government seizure of Netherlands-based Nexperia B.V. on October 12, the Dutch and Chinese governments have been engaged in talks to resolve the dispute around the company. While talks on October 22 initially did not lead to any progress, further discussions last week appeared to be more constructive in nature.
The recent talks resulted in reports on November 7 that the Dutch government would be willing to suspend its control of Nexperia by November 14 if the Chinese government allows exports of critical chips manufactured in the country to resume and resolve certain financial issues with Nexperia’s China-based unit.
The Dutch government has increasingly been signaling that positive progress has been made regarding the dispute around Nexepria, with government officials suggesting on November 6 that shipments of Chinese-made Nexperia products could reach the company’s customers in the coming days.
According to a statement on November 9, China’s Ministry of Commerce will allow the export of components used in civilian applications, but no details on which customers have already been granted exemptions or when they can expect to receive new shipments were immediately disclosed.
After control of Nexperia was seized by the Dutch government in October, the Chinese government responded by imposing retaliatory restrictions on the export of products from Nexperia’s site in Dongguan, China, where most of the company’s semiconductor products are manufactured. Nexperia declared force majeure on November 4 following the restrictions, citing uncertainty around its ability to source chips from its Dongguan production site and fulfill customer orders. Most notably, the supply shortages of Nexperia products have led to numerous production stoppages at companies in the automotive and electronics sectors.
Automakers face production disruptions due to chip supply shortages
Automakers and electronics manufacturers have experienced production impacts following Nexperia’s announcement that it can no longer guarantee the delivery of chips to its customers. Automotive associations in Germany, Japan, Brazil, the United Kingdom, and the United States all issued warnings that their members were likely to face disruptions from the dispute and could face significant impacts in the coming weeks if the situation was not resolved quickly.
The shortages had a disproportionately high impact on European manufacturers already facing a 15% import tariff from the U.S. and China’s tightening export restrictions on rare-earth minerals.
Production impacts were not limited to Europe, however, with production stoppages occurring in Asia and the Americas as well. Volkswagen AG, Robert Bosch GmbH, Nissan Motor Co. Ltd., and Honda Motor Co. Ltd. were some of the companies most impacted by the supply disruption. While several companies experienced direct production stoppages because of the shortage, others were able to mitigate disruptions by securing alternative supplies or because they maintain a larger chip stockpile.
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