Civil war at Chinese-owned chipmaker threatens car factory shutdowns

An intensifying stand-off between the Dutch and Chinese arms of chipmaking giant Nexperia threatens to bring chaos to the British car industry.

Nexperia makes low-value semiconductors that are vital to car manufacturers as they are used in components such as windscreen wipers and electric window controls.

The chips are made in the Netherlands before being finished in China, but Beijing blocked the trade after the Dutch government seized control of Nexperia, citing national security concerns.

The White House said on Saturday that China would change course and allow exports of finished chips, following discussions between presidents Donald Trump and Xi Jinping.

But on Sunday a feud inside Nexperia appeared to worsen, when the company’s Chinese unit lashed out at its Dutch counterpart’s “extremely irresponsible” actions and “highly deceptive” claims.

The two sides’ factories are still refusing to send products to each other amid conflicting accusations over multimillion-dollar debts and broken contracts.

The Netherlands-based arm said last week it would no longer send European-made wafers to the company’s factory in southern China, which uses them to make about 70pc of the Nexperia’s worldwide output of finished chips.

It cited the Chinese unit’s alleged “recent failure to comply with the agreed contractual payment terms”.

Nexperia China on Sunday branded these claims as “misleading and highly deceptive”, alleging the Dutch unit owed the Chinese more than one billion yuan (£107m) – a claim rejected by the Dutch.

The Chinese team’s statement alleged that the “unilateral” Dutch halt to wafer shipments had “gravely undermined customer trust”, and claimed that Dutch executives had “put personal interests above the company’s overall interests”.

A source close to the Dutch arm of the business disputed these claims.

The move ratcheted up alarm in the car industry, whose products typically contain hundreds of Nexperia’s low-cost circuits.

Vauxhall owner Stellantis has set up a “war room” to tackle potential chip shortages.

“Stellantis is closely monitoring the situation, and collaborating with all suppliers to assess potential impacts and develop mitigation measures,” a company spokesman told The Telegraph.

A spokesman for BMW, which makes Mini and Rolls-Royce cars in Britain, said the German giant was “in close contact with our suppliers” and would “continuously assess the situation to identify potential supply risks early and take appropriate measures if necessary”.

A Jaguar Land Rover source told The Sunday Times that car production was at risk of a “significant stoppage” in December if the situation was not resolved. A top Nissan executive last week described it as “a big issue”.

The crisis first blew up when the Dutch government seized control of Nexperia in September and sacked its Chinese chief executive.

The ostensible concern was that Chinese owner Wingtech Technologies was planning to appropriate the Europe-based chipmaker’s intellectual property. But it also came immediately after the US stepped up export controls on Chinese companies.

In early October, Beijing responded by banning exports of finished Nexperia chips from China, potentially triggering an almost immediate worldwide shortage.

The White House said on Saturday that under the Trump-Xi deal Beijing would “take appropriate measures to ensure the resumption of trade from Nexperia’s facilities in China”. The deal also included a year-long pause on the White House’s tough new export controls.

Beijing’s commerce ministry then invited companies facing chip supply difficulties to apply for an exemption to its export ban. But a ministry statement also lambasted the Netherlands, saying it was “the Dutch government’s inappropriate interference in the company’s internal affairs” that had caused “the current chaos in the global supply chain”.

Nexperia China this weekend said it had a big enough wafer stockpile to fulfil customer orders, and was looking to get more from other sources. Nexperia Netherlands, meanwhile, is scrambling to get chips for its customers from elsewhere, including its own smaller factory in Malaysia.

European and Chinese officials were reportedly meeting over the weekend in a fresh effort to resolve the impasse.

Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.