China has told the Netherlands to “stop interfering” in the seized chipmaker Nexperia, accusing it of prolonging a dispute that has disrupted the global car industry.
The Dutch government took control of the semiconductor-maker at the end of September amid US security concerns about the company’s Chinese parent, Wingtech Technology.
In response, China halted exports of Nexperia products, restricting access to the vital components used in everything from airbags to central locking, and prompting carmakers in the EU, the UK and Japan to issue warnings that supply shortages could lead to stoppages.
The EU is in the middle of urgent talks with Beijing to lift export controls on the chips and also on crucial rare earth minerals, after a summit with officials from both sides in Brussels on Friday.
On Tuesday, however, China signalled its decisions were still being coloured by the Nexperia dispute, accusing the Dutch of failing to cooperate on export exemptions and urging them to work in a “constructive manner” to ease supply chain issues.
“The Netherlands continues to act unilaterally without taking concrete steps to resolve the issue, which will inevitably exacerbate the adverse impact on the global semiconductor supply chain,” China’s ministry of commerce said. “Neither China nor the global industry wishes to see this.”
In a statement on Tuesday, the European Commission said it had made some progress on Friday and that Beijing had committed to engaging further over other restrictions on rare earths including the magnets that control car window mechanisms and boot openings.
The commission will debrief EU ambassadors on Wednesday and has asked member states to report back by Friday on the impact of the chip ban in their factories. Carmakers in the EU warned last week they were “days away” from production stoppages.
The trade tensions with the EU are in contrast to the truce struck between China and the US last Thursday. The White House said in its readout after the agreement that China would “eliminate” all “current and proposed export controls on rare earth elements and other critical materials” and end the semiconductor “retaliation”.
The Dutch government invoked a cold war era law when it seized control of the chipmaker, ousting its chair, Zhang Xuezheng, in part because of fears that Wingtech could move intellectual property to another company it owned.
It also came after the US raised concerns early in the summer about Nexperia’s management. Court documents show the US Bureau of International Security and Nonproliferation told the Dutch foreign ministry in June: “The fact that the company’s CEO is still the same Chinese owner is problematic … It is almost certain that the CEO will have to be replaced.”
The dispute escalated last week when Nexperia told customers all supplies to its Chinese factory had been suspended. Although Nexperia’s chips are manufactured in Europe, about 70% are packaged in China before distribution.
Wingtech said the actions of the Dutch government “appear to be aimed at allowing a new Dutch-owned company to take Nexperia”. It warned that “any Nexperia-successor company is doomed to fail”, adding that “80% of Nexperia’s back-end capacity is within mainland China”.
A spokesperson said: “If this matter is not resolved very soon, there will be no company left for customers to return to, and hundreds of people in the Netherlands, Germany and the UK will lose their jobs with many more affected indirectly across Europe. Nexperia’s European employees are very concerned about this, but the company’s senior Dutch management appears oblivious to these concerns.”
The Dutch economic affairs ministry told Reuters that talks between the two governments were still under way. “We remain in contact with the Chinese authorities and our international partners to work toward a constructive solution that is good for Nexperia and our economies,” a spokesperson said.
The dispute adds to the turmoil that UK auto manufacturers have faced after a cyber-attack forced Jaguar Land Rover, Britain’s largest carmaker, to halt production in September.
JLR has resumed production, supporting a small boost to UK factories in October. Experts have estimated the attack cost the UK economy about £1.9bn, affecting as many as 5,000 organisations across the company’s supply chain.
