Chip conflict deepens as Nexperia pauses wafer shipments to China facility

Nexperia has stopped sending wafers to its assembly factory in China after the China unit refused to make payments, saying the Chinese entities were no longer operating under its corporate governance rules.

Management said instructions issued from the global headquarters were not being followed, so the chipmaker told customers on October 29 that shipments to the facility were halted, according to Bloomberg, a decision that exposed internal conflict inside the chipmaker at a time when the global semiconductor supply chain is already under stress.

Nexperia supplies power and control chips used in vehicles made by companies including Volkswagen and BMW.

Management said instructions issued from the global headquarters were not being followed. The company said:

“We cannot oversee if and when products from our facility in China will be delivered. Given the missing transparency and oversight over the manufacturing processes we cannot guarantee the intellectual property, technology, authenticity and quality standards for products delivered from the Nexperia facility in China as of Oct. 13.”

The halt adds pressure to automakers who rely on steady chip supply to avoid production delays.

China factory faces allegations

Nexperia said the refusal to pay for the wafers was not a one‑time situation. The company reported that corporate seals belonging to the China entities were taken and used without valid approval.

According to the company, unauthorized letters with incorrect information were sent to customers, subcontractors, third‑party suppliers and employees. Nexperia also said the China unit established unauthorized bank accounts and directed customers to make payments to these accounts instead of approved corporate channels.

This internal conflict is taking place while governments are also involved. The Dutch government assumed veto powers over the company in September. Dutch authorities said there were concerns that parent Wingtech was restricting Nexperia’s operations and threatening the security of chip supplies.

Wingtech’s founder, Zhang Xuezheng, was suspended as Nexperia’s chief executive officer by an Amsterdam court on October 7. Wingtech denied the allegations and said it wants Zhang reinstated.

In response to the Dutch state’s move, China imposed restrictions on exports of Nexperia products from the company’s Guangdong plant. That factory accounts for about half of Nexperia’s production volumes before the conflict.

With exports restricted there, Nexperia had already been under strain. The halt of wafer supply adds another layer of disruption to manufacturing plans.

Dutch and Chinese governments trade pressure

China’s Ministry of Commerce criticized the Netherlands this week, saying the Dutch government has not taken enough action to resolve the dispute.

China said on November 1 it would grant exemptions for exports of Nexperia products but asked the Netherlands to “stop interfering” in the company’s internal affairs and work toward resolving the situation. China said:

“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.”

Nexperia said it appreciates the commitment toward restoring supply flows but said it has not yet received necessary details about how and when export curbs will be lifted.

The company said it wants to understand the conditions, criteria and procedures required before operations can return to normal.

The tension has already affected carmakers. Volkswagen, Europe’s largest automaker, said it is reviewing other sourcing options to secure chips.

The company said production is covered through the current week, but uncertainty remains. Suppliers and manufacturers across the automotive sector have slowed production due to concerns about shortages of Nexperia transistors and logic chips.

The situation remains unresolved. Both government pressure and internal company disputes continue at the same time.

The longer this continues, the more auto production lines wait, suppliers hesitate, and semiconductor supply chains strain. There are no clear signals of a settlement yet.

If you're reading this, you’re already ahead. Stay there with our newsletter.