Nexperia urges Chinese units to restore supply chain operations

Dutch chipmaker Nexperia has urged its Chinese units to help restore its supply chain, which was disrupted after the Dutch government took control of the company in September.

Nexperia, which is headquartered in the Netherlands and owned by China’s Wingtech, said in an open letter that it tried multiple times to reestablish contact with its Chinese entities but received no response.

The company produces chips for cars and electronics, with wafers made in Hamburg and sent to Dongguan, China, for packaging.

The Dutch government intervened on September 30 to stop the company’s former CEO from moving European operations to China.

After the takeover, China halted exports of Nexperia’s finished products on October 4, though some restrictions have been eased.

Nexperia’s Chinese arm later said it was no longer under European management, and the European side stopped shipping wafers to China on October 26 due to non-payment.

China called for a company-led resolution after a call between its commerce minister Wang Wentao and EU trade commissioner Maros Sefcovic.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

Nexperia’s lopsided manufacturing risk

Nexperia’s weak spot is how it builds chips, with wafer fabrication in Europe (Hamburg and Manchester). The biggest assembly and test (backend) plant sits in Dongguan in Guangdong province in China with over 50 billion pieces a year, plus support for high-runner, medium-power SMD (Surface-Mount Device) packages 1.
This split locks in a one-way dependency. European lines cannot reroute wafers fast. Seremban in Malaysia turns out 20 billion pieces per year. Cabuyao in the Philippines makes about 1 billion a year. Neither can take on Dongguan’s load 1.
Dongguan runs nonstop. It has more than 100 assembly lines with over 1,500 stations. Copying that scale needs years of capital spending plus workforce training 2.

Southeast Asian OSATs stand to gain

For Outsourced Semiconductor Assembly and Test (OSAT) players in Malaysia and the Philippines, Nexperia’s turmoil opens doors with automakers that need discrete components. Malaysia targets over $100 billion in semiconductor investment, pulling more backend capacity there 3.
Public equities investors in semis should watch capacity plans from ASE Technology Holding (ASE). ASE bought Infineon’s Philippines backend facility in 2024, and regional OSATs look set to take transfer work from disrupted suppliers 3.
Equipment suppliers plus factory automation vendors in assembly/test can speed deals by stressing the uptime of spread-out manufacturing for power discretes (individual power semiconductor components) and automotive-qualified packaging lines (built to meet auto-industry reliability standards).