Post by : Badri Ariffin

In a development reverberating across the semiconductor sector, Dutch chipmaker Nexperia has paused provision of wafers to its Chinese assembly plant in Dongguan, Guangdong, according to a letter dated October 29. The company said the local management had not honoured agreed contractual payment arrangements.

The suspension arrives as global automakers continue to face semiconductor shortages that have already disrupted production; the move may further strain an already fragile supply chain.

The current standoff follows the Dutch government took control of Nexperia from its Chinese owner, Wingtech Technology, on September 30. That intervention also led to the removal of Nexperia’s China-based chief executive amid worries over the transfer of sensitive technology.

Tensions between Nexperia’s Dutch leadership and its Chinese subsidiary have intensified since then. The Chinese unit, which had resumed local semiconductor deliveries, shifted to settling transactions in Chinese yuan, moving away from foreign currencies like the U.S. dollar.

Nexperia is a major supplier of chips for the automotive and consumer electronics industries, and its China operations are integral to its output. Roughly 70% of chips made in Europe are packaged in China before being shipped worldwide.

In its letter the firm said it had "maintained shipments for as long as commercially feasible" but could not continue under the present conditions. The company added it is working on "alternative solutions" to sustain customer support.

Despite the suspension, Nexperia emphasised it is not withdrawing from China, describing the measure as a temporary pause while contractual issues are resolved.

The episode has drawn scrutiny from both European and Chinese officials. The Dutch government says its actions aimed to safeguard production capacity, while Nexperia characterised the wafer halt as an independent corporate decision.

Market signals have been immediate: prices for certain Nexperia components have surged more than tenfold recently, reflecting heightened uncertainty.

Automakers including Stellantis and Nissan have established monitoring teams to evaluate the impact, underscoring concerns that the dispute could reconfigure chip supply relationships between Europe and China.

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