The Dutch government recently intervened harshly at Nexperia. According to outgoing Economy Minister Vincent Karremans, the move is necessary to ensure the economic security of the Netherlands and the availability of chips. However, automotive industry association ACEA is very concerned about the impact of the measure and fears chip shortages.
Nexperia is a Dutch chip manufacturer. The company produces discrete semiconductors, logic ICs and MOSFETs, which are widely used in automotive, consumer electronics and industrial applications, among others. The company has over 15,000 employees, operates worldwide and has its headquarters in Nijmegen, the Netherlands.
The chip company has been acquired by Chinese company Wingtech, which is largely owned by the Chinese state, for about EUR 3.6 billion in 2019. Wingtech is a large technology company whose operations include the chip sector and focus on integrating communication products.
Goods Availability Act
So last week, Minister Karremans intervened harshly at Nexperia. In doing so, the minister made use of the Goods Availability Act (Wbg). This act allows the government to block or reverse decisions within a company if the availability of crucial goods or technology is compromised. The Wbg should thus help ensure the continuity of key products and technological know-how in the Netherlands and Europe.
The deployment of the Wbg is exceptional; the law dates back to the Cold War and has rarely been used. Minister Karremans argues that the deployment of the law at Nexperia was necessary as problems at Nexperia could have serious consequences for the Dutch and European economy, and threaten economic security. In a letter addressed to the House of Representatives, Minister Karremans says his intervention aims to limit these risks and ensure stability at the company.
"Recently, I have received serious signals of governance shortcomings within Nexperia, stemming from specific actions of the CEO. These shortcomings pose an acute and serious threat to the continuity of the company and thus the preservation of crucial technological know-how, as well as production and development capacities in the Netherlands and Europe," the minister reported in the letter.
Chinese countermeasure
China is angry about the Dutch government's decision. In response to the measure from the Netherlands, the Chinese government is imposing an export ban on Nexperia. In practice, this means that Nexperia chips produced in China will no longer be allowed to leave the country.
This Chinese countermeasure could have far-reaching consequences. For example, Nexperia produces wafers in the Netherlands, which are then processed into chips in China. So now Nexperia is not allowed to export these finished products, which means the company can no longer supply chips to the Netherlands.
Automotive sector fears chip shortages
The European automotive manufacturers' trade association ACEA is very concerned about the impact of government intervention on Nexperia. ACEA fears that European car production could be severely disrupted by the measure. Car manufacturers and suppliers have already been warned by Nexperia that it can no longer guarantee the supply of chips to the automotive sector.
"Car manufacturers have taken steps in recent years to diversify their supply chains, but risks can never be completely eliminated. This is an industry-wide problem that affects a large number of suppliers and virtually all our members," said Sigrid de Vries, director general of ACEA. "We suddenly find ourselves in this alarming situation. We really need quick and pragmatic solutions from all the countries involved."
ACEA warns that without Nexperia chips, European suppliers will not be able to produce parts and components needed by car makers. It therefore fears production stoppages. Among other things, it points to Nexperia's size and market share. ACEA warns that sourcing chips from other parties can take months, while current stocks of Nexperia chips are good for just a few weeks.
