By Toby Sterling
AMSTERDAM (Reuters) -Customers of Chinese-owned Dutch chipmaker Nexperia are working with the company on a workaround to bypass a feud between the Europe-based unit and its packaging plant in China, two sources close to the firm told Reuters.
The workaround, previously unreported, is not a permanent solution, nor feasible for smaller clients, but offers a patch that could relieve some pressure on the auto market, where a scarcity of Nexperia chips has dented some production of cars and parts.
A standoff between the European side of the business and its Chinese plant, sparked by the seizure of Nexperia by the Dutch government over fears of technology transfer, has snarled supply of its chips that are key for the global automotive market.
Nexperia makes wafers, the base material for making multiple chips, in Europe, which are then sent to its plant in Dongguan in China where they are cut and packaged. However, due to the standoff the European side has halted shipments to China.
Now some clients are working with Nexperia Europe to purchase silicon wafers directly from its factory in Hamburg, separately transport them to China, and there contract the Dongguan plant for the final packaging, sources said.
Reuters could not establish which clients were in talks over the workaround or if any had yet moved ahead. Automakers and suppliers use Nexperia chips, including Volkswagen, Hella, Bosch, Aumovio and Honda.
A spokesperson for Nexperia said the company was working to support customers in every way it could, without commenting on specific plans. A spokesperson for Nexperia’s Chinese parent Wingtech declined comment.
NEXPERIA WORKAROUND A ‘SHORT-TERM PATCH’
The Chinese government gave some temporary relief to carmakers this week by relaxing export controls on chips made by the Dongguan plant. A Dutch delegation is expected to travel to China next week for further talks.
The workaround approach treats Nexperia almost as two separate production and packaging companies. It would temporarily address quality concerns about chips being packaged in Dongguan, which has already been operating independently, while each arm of the company would still be paid for its work.
Nexperia halted shipment of wafers to its Chinese subsidiary on October 26, citing nonpayment. The Chinese arm is currently selling down stockpiles of the company’s finished products. It is not certain how long those stockpiles will last.
“A lot of companies are currently negotiating and some already are buying wafers from Nexperia EU and providing them to Nexperia China to get exclusive production for themselves,” one source, a distributor of Nexperia products, said.
The second source, who is familiar with the company, said large customers were looking at the plan as a “short-term patch”, along with other options.
Other potential workaround options include replacing Nexperia chips with somewhat comparable chips made by rivals such as Onsemi and STMicroelectronics.
Longer term, the company’s European arm is looking to expand packaging in Malaysia and the Philippines. The Chinese arm is looking to replace European wafers with wafers made in China.
(Reporting by Toby Sterling; Editing by Adam Jourdan, Aidan Lewis)
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