China Future Tech webinar: how the Nexperia saga will change supply-chain considerations

While the Dutch government has offered goodwill in the dispute over control of Nexperia, a Chinese-owned, Netherlands-based chipmaker, the crisis is far from over.\nChina’s Ministry of Commerce on Wednesday welcomed the Dutch government’s revocation of an executive order taking control of the firm. But it also noted that a Dutch court ruling remained a “key obstacle” to resolving the matter. Wingtech Technology, the Chinese owner of Nexperia, said it had yet to resume control of the chipmaker.\nIn the latest China Future Tech webinar on Thursday, the Post’s Xiaofei Xu, political economy reporter based in Paris, and Coco Feng, senior tech reporter based in southern China’s Guangdong province, discussed the likely development of the dispute and its broad implications.\n\n\nWhat is Wingtech likely to do to regain control of Nexperia, and how likely is it to succeed?\nWingtech could continue the legal battle by going to the Dutch supreme court to overthrow the Enterprise Chamber ruling on October 7 that kicked Zhang Xuezheng, the former CEO, off the board of directors. While there is a slim chance that a review by the court would overthrow the Enterprise Chamber decision, it could take months or even years before a final decision is made.\nWill Nexperia be separated into two separate parts, and how would this affect auto chip supplies?\nA likely scenario is that Nexperia China will be run by a group separate from the management team at the headquarters in Nijmegen.\nNexperia China would comprise the packaging factory in Dongguan, Guangdong province, which accounted for 70 per cent of Nexperia’s output, as well as its sales and supporting facilities on the mainland. The non-China operations, including the wafer-fabrication facilities in Europe and two other packaging plants in Asia, would be run out of the Netherlands.\nThe two sides have been quarrelling over a range of issues, blaming each other for the supply-chain disruptions. The situation is expected to continue until the two sides can compromise. It will be up to the negotiations between the two separate operations, as well as China’s export control relaxations, to decide whether stable supplies can be guaranteed.\nWhat are the key implications of the Nexperia saga on both sides?\nEuropeans, especially European politicians, have to think about risks and geopolitical tensions in approving Chinese investment deals. European governments are expected to emphasise “autonomy” from both the US and China.\nFor Chinese businesses, the seizure of Nexperia is a cautionary tale. They must be alert to the geopolitical risks of investing abroad. Chinese investors are now asking companies about investment risks in Europe after the Nexperia dispute.\n