Post by : Badri Ariffin

Following a pause in operations, Nexperia’s unit in China has resumed chip sales, now requiring all transactions to be conducted solely in Chinese yuan. This shift represents a significant departure from previous practices where currencies like the U.S. dollar were used.

The stoppage in activities was initiated after an export ban imposed by Beijing on October 4, coinciding with the Dutch government’s takeover of Nexperia on September 30. Concerns regarding corporate governance led to the dismissal of Zhang Xuezheng, the Chinese CEO, exacerbated by worries that Nexperia’s parent company, Wingtech Technology, could misdirect vital chip technology. Additionally, U.S. restrictions on Wingtech have intensified the scrutiny.

Focus on Domestic Sales and Yuan Transactions

Insider sources indicate that distributors must finalize all sales in yuan, extending even to sales to end customers. This strategy seems aimed at stabilizing local chip supply while reducing the influence of Nexperia’s Dutch owners.

Although Nexperia's Chinese operations are essential for packaging, the ongoing tensions have prompted a search for alternative partnerships beyond China. Company representatives assert that this shift was planned previously, yet insiders suggest an increased urgency due to the recent export ban.

Warnings and Tensions Emerge

In an unexpected alert, Nexperia cautioned its Chinese clients that products from the Chinese division might pose potential risks, though no direct advice against purchasing was given. The subsidiary has stated via WeChat that it remains operationally independent and is continuing its regular production and business efforts, while also criticizing the Dutch parent for disseminating “unfounded concerns” regarding product compliance and hinting at possible legal proceedings.

Industry Repercussions

The ongoing disruption has raised serious concerns within the automotive industry. The Japan Automobile Manufacturers Association has signaled that its members are being alerted to possible supply instabilities from Nexperia, a key supplier of high-demand chips used in many vehicles. Meanwhile, German officials have begun urgent dialogues with car manufacturers and suppliers to evaluate possible impacts.

As tensions endure, Nexperia’s China unit seems resolute in fortifying its domestic footprint, while its Dutch parent strives to manage the situation's narrative. This dynamic illustrates the interplay between geopolitical maneuvers, corporate governance, and currency regulations in reshaping global tech supply chains.

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