Global Chip Shortage Worsens as Nexperia Feud Escalates

Strategic Insights -

The intensifying stand-off between Nexperia's Dutch and Chinese arms threatens to bring chaos to the British car industry, as the company's crucial low-value semiconductors are used in car components such as windscreen wipers and electric window controls. The crisis has been brewing since the Dutch government seized control of Nexperia in September, citing national security concerns, and Beijing responded by banning exports of finished chips from China. The White House announced a deal with China to resume trade, but the two sides' factories remain at odds over multimillion-dollar debts and broken contracts. The situation has sparked alarm in the car industry, with Vauxantis, BMW, and Jaguar Land Rover setting up "war rooms" to tackle potential chip shortages.

Key Takeaways:

  • Nexperia's low-value semiconductors are vital to car manufacturers, with hundreds of Nexperia's low-cost circuits found in each car.
  • The Dutch government seized control of Nexperia in September, citing national security concerns, and Beijing responded by banning exports of finished chips from China.
  • Nexperia's Chinese unit has accused its Dutch counterpart of "extremely irresponsible" actions and "highly deceptive" claims over multimillion-dollar debts and broken contracts.
  • The two sides' factories are still refusing to send products to each other, with Nexperia China alleging that the Dutch unit owes it more than one billion yuan (£107m).
  • European and Chinese officials are meeting to resolve the impasse, with the White House announcing a deal to resume trade.
  • The car industry is deeply concerned, with Vauxantis, BMW, and Jaguar Land Rover setting up "war rooms" to tackle potential chip shortages.
  • A top Nissan executive described the situation as "a big issue", while a Jaguar Land Rover source warned of a "significant stoppage" in December if the situation is not resolved.
  • Nexperia Netherlands is scrambling to get chips from elsewhere, including its own smaller factory in Malaysia, while Nexperia China has a wafer stockpile to fulfil customer orders.

Statistics:

  • 70pc of Nexperia's worldwide output of finished chips are made at the company's factory in southern China.
  • £107m (more than one billion yuan) - the amount allegedly owed by Nexperia's Dutch unit to its Chinese counterpart.
  • Hundreds - the number of Nexperia's low-cost circuits found in each car.
  • September - the month when the Dutch government seized control of Nexperia.
  • October - the month when Beijing banned exports of finished Nexperia chips from China.
  • December - the month when a Jaguar Land Rover source warned of a "significant stoppage" in production if the situation is not resolved.

Sources:

  • The Telegraph
  • The Sunday Times
  • Getty Images AsiaPac
  • The White House