China accuses Dutch of prolonging chip war that threatens to halt car factories | Automotive industry

China told the Netherlands to “stop interfering” with seized chip maker Nexperia and accused the Netherlands of prolonging a dispute that has disrupted the global auto industry.

The Dutch government took control of the semiconductor maker at the end of September due to US security concerns regarding the company’s Chinese parent, Wingtech Technology.

In response, China halted exports of Nexperia products, restricting access to vital components used in everything from airbags to central locking and prompting automakers in the EU, UK and Japan to warn that supply shortages could lead to production halts.

The EU is in the midst of urgent talks with Beijing to lift export controls on chips as well as key rare earth minerals, following a summit with officials from both sides in Brussels on Friday.

But on Tuesday, China signaled that its decisions were still influenced by the Nexperia dispute, accusing the Netherlands of failing to cooperate on export exemptions and urging them to work “constructively” to ease supply chain problems.

“The Netherlands continues to act unilaterally without taking concrete steps to solve the problem, which will inevitably further increase the negative impact on the global semiconductor supply chain,” China’s Ministry of Commerce said. “Neither China nor the global industry wants to see this.”

The European Commission said Tuesday it had made some progress on Friday and that Beijing had pledged to move further on other restrictions on rare earths, including magnets that control car window mechanisms and trunk openings.

The commission will brief EU ambassadors on Wednesday and has asked member states to report on the impact of the chip ban on their factories by Friday. Automakers in the EU warned last week that production cuts were “days away”.

Trade tensions with the EU contrast with the ceasefire reached between China and the US last Thursday. In a statement made after the agreement, the White House said that China It would “eliminate” “all existing and proposed export controls on rare earth elements and other critical materials” and end semiconductor “retaliation.”

The Dutch government invoked the Cold War-era law when it seized control of the chip maker and ousted its chairman, Zhang Xuezheng, partly out of fears that Wingtech might transfer intellectual property rights to another company it owns.

This also comes after the United States raised concerns about Nexperia’s management at the beginning of the summer. Court documents show that the US Office of International Security and Non-Proliferation told the Dutch foreign ministry in June: “It is problematic that the CEO of the company still has the same Chinese owner… It is almost certain that the CEO will have to be replaced.”

The dispute escalated further last week when Nexperia told customers that all supplies to its Chinese factory had been suspended. Although Nexperia’s chips are manufactured in Europe, about 70% are packaged in China before distribution.

Wingtech said the Dutch government’s actions “appear to be aimed at allowing a new Dutch-owned company to acquire Nexperia.” “Any successor to Nexperia is doomed to fail,” he warned, adding that “80% of Nexperia’s backend capacity is in mainland China.”

A spokesman said: “If this issue is not resolved soon, customers will have no company to return to and hundreds of people will lose their jobs in the Netherlands, Germany and the UK, with many more across Europe indirectly affected. Nexperia’s European employees are very concerned about this, but the company’s Dutch senior management appear unaware of these concerns.”

The Dutch ministry of economic affairs told Reuters that talks between the two governments were still ongoing. “We are in communication with Chinese authorities and our international partners to work towards a constructive solution that will be good for Nexperia and our economies,” a spokesman said.

The dispute adds to the turmoil facing British automakers after a cyberattack forced Britain’s largest carmaker, Jaguar Land Rover, to halt production in September.

JLR restarted production in October, supporting a small increase at factories in the UK. Experts estimate the attack cost the UK economy around £1.9 billion and affected up to 5,000 organizations in the company’s supply chain.