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Nexperia chips crucial for automotive electrical functions

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Switching suppliers challenging for carmakers

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US-China tech rivalry backdrop to Nexperia chip crisis

By Toby Sterling

AMSTERDAM, Oct 29 (Reuters) - A standoff between the

Netherlands and China over chipmaker Nexperia has sparked a near

crisis for global carmakers that has threatened production,

laying bare supply chain risks.

The fight hit the headlines over fears about technology transfer

from the Dutch company to its Chinese parent Wingtech

, amid rising scrutiny on global tech from the

administration of U.S. President Donald Trump.

WHAT IS NEXPERIA?

Netherlands-based Nexperia grew from the former chipmaking arm

of Philips Electronics. It makes basic inexpensive computer

chips in large volumes with over 110 billion units a year that

go into products like cars and consumer electronics.

Nexperia makes its silicon wafers in Germany and Britain,

which are then sent to plants in China and elsewhere in Asia to

be sliced into individual chips and packaged. It was bought for

$3.6 billion in 2019 by Chinese electronics firm Wingtech.

Nexperia had sales of $2 billion last year.

WHAT THE FIGHT IS ALL ABOUT

Chinese ownership of Nexperia has become divisive in recent

years as U.S.-China technology rivalry escalated.

Wingtech was put on a U.S. blacklist in 2024, and new U.S.

rules this year meant that Nexperia, as a subsidiary, would also

be included unless given an exemption.

The Dutch government intervened on September 30, saying it

would block moves to transfer Nexperia's technology or

operations to China. A Dutch court also suspended Nexperia CEO,

Wingtech founder Zhang Xuezhen, citing mismanagement.

Beijing responded by blocking Nexperia products from leaving

China, prompting the company to tell carmakers it could no

longer guarantee supplies.

WHY DO THESE CHIPS MATTER?

Nexperia makes basic power control chips such as transistors

and diodes that cost only a few cents to buy. However, such

chips are needed in almost every device that uses electricity.

In cars, they are used to connect the battery to motors, for

lights and sensors, for braking systems, airbag controllers,

entertainment systems and in electric windows.

ARE THERE ALTERNATIVE SUPPLIERS?

Carmakers typically have some stockpiles and

alternative suppliers, but cannot switch overnight.

The sheer volume Nexperia produces makes it hard to find

alternative suppliers quickly.

All chips used in cars must pass stringent tests, and the

qualification process for a new supplier takes months.

The top 10 makers of the so-called "discrete" chips includes

Infineon, Onsemi, STMicroelectronics

, Fuji Electric, Renesas and Nexperia.

HOW ARE CARMAKERS AND SUPPLIERS AFFECTED?

Carmakers are scouring the globe for alternative supplies.

Nissan Motor ( NSANF ), Mercedes-Benz and GM

have sounded the alarm about the deepening supply crunch. German

auto parts supplier Bosch is preparing to furlough staff at its

Salzgitter plant if the dispute is not resolved soon.

Honda ( HMC ) suspended production at a plant in Mexico on

Tuesday, and has already started to adjust production in the

United States and Canada.

HOW CAN THE ISSUE BE RESOLVED?

The Dutch Economic Affairs ministry said this week it is in

talks with China and hopes it can strike a deal to resolve the

crisis. But it did not offer a timeline.

The issue may

come

up at this week's meeting between U.S. President Donald

Trump and Chinese President Xi Jinping.

Nexperia is in contact with the Chinese and U.S.

governments over export rules, while Wingtech says the issue can

only be resolved by restoring its "full control and ownership

rights".

The longer the stalemate lasts, the more likely it is

that Nexperia's customers will defect to alternative suppliers,

or that the company splits into a European and a Chinese

business as

has already started to happen

.