Nexperia’s Supply Chain Crisis Deepens as It Presses China Unit to Talk

The complex corporate squabble between Dutch chipmaker Nexperia and its Chinese entities has escalated to a public plea.

The European headquarters is urgently calling on its China-based leadership to restore the broken supply chain and prevent widespread customer production halts.

Nexperia issued an open letter on Thursday (Nov. 27) to the leadership of its Chinese facilities. The letter confirmed that despite the Dutch government’s recent decision to suspend its controversial executive order, the flow of crucial chips remains unpredictable.

Customers across various industries are “still reporting imminent production stoppages,” a situation Nexperia stressed “cannot persist,” according to the letter.

The company’s manufacturing process relies on a cross-border setup: wafers are produced in Hamburg, Germany, and then shipped to Dongguan, China, for final packaging before being sent to global customers. This crucial link has been fractured since the Dutch government’s intervention, which led to a management shakeup at the Dutch headquarters.

Dialogue efforts hit a wall

The core problem, according to Nexperia’s leadership in Nijmegen, is a complete lack of cooperation from their Chinese counterparts.

The Dutch unit stated that it has made “repeated and multiple attempts, both formal and informal, to re-establish the dialogue with Nexperia’s entities in China by means of direct outreach via calls, emails and proposed meetings,” including “formal correspondence to demand performance of rights,” the letter reads.

However, the plea for discussion has met a brick wall. The company lamented, “Regrettably, Nexperia did not receive any meaningful response.” This forced the company to take the drastic step of communicating publicly to “underscore the urgency.”

What Nexperia wants now

The Dutch parent company, Nexperia is demanding immediate, structured negotiations with its Chinese entities to address two critical areas: the restoration of the supply chain, seeking predictable, established supply flows and corporate governance alignment, which is necessary to resume operations within the established intercompany agreements and adhere to lawful instructions from Nexperia’s global management.

To achieve this, the company has proposed to engage in direct dialogue via email or through a neutral, professional third-party mediator.

Geopolitics and the corporate rift

The supply chain crisis stems from a wider political and corporate dispute that erupted on Sep. 30, when the Dutch government invoked a Cold War-era law to take temporary control of Nexperia’s European operations.

This was a response to internal corporate concerns that were perceived as a threat to national and European economic security and the safeguarding of crucial technological knowledge.

In retaliation, Beijing halted exports of Nexperia’s finished products from its Chinese facilities on Oct 4. While China has since partly relaxed these export controls, and the Dutch government suspended its executive order as a “show of goodwill” to encourage a resolution, the internal corporate rift remains open.

The Chinese unit of Nexperia has reportedly declared itself no longer subject to control by the European management, and in a tit-for-tat move, the European side stopped shipping wafers to China on Oct. 26, citing non-payment.

This ongoing corporate standoff has occurred even as Chinese and European officials, including Chinese Commerce Minister Wang Wentao and EU Trade Commissioner Maros Sefcovic, have pushed for a “company-led resolution” to restore stability to the global semiconductor supply chain.

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