A piece of good news received today is that the Nexperia semiconductor incident has been resolved, and domestic media are quite excited. However, as more detailed information emerges, it becomes clear that this is only a temporary suspension, and what will happen next is still uncertain.
On November 19, Dutch Minister of Economic Affairs Karremans announced the suspension of intervention measures against Nexperia in a significant policy adjustment from the forced takeover action on September 30. The original official statement reads: “In light of recent developments, and after close consultations with our European and international partners, I believe it is the right time to take constructive steps, namely to suspend the directive I issued against Nexperia under the Materials Supply Act.”
Initially, it was thought that the takeover would be canceled, but in reality, it is only a suspension, which adds more uncertainty to future developments. The Ministry of Commerce stated in an interview, “Both parties have reached a consensus, and administrative intervention should be lifted, allowing the companies to resolve internal disputes through negotiation in accordance with the law, thereby protecting the legitimate rights and interests of investors and promoting the safe and stable recovery of the global semiconductor supply chain.” The Dutch are merely playing a word game, trying to delay matters as much as possible, likely to decide the subsequent process based on the results of Sino-U.S. negotiations.
The U.S. has issued regulations implementing joint controls on affiliated enterprises holding 50% or more of sanctioned entities, commonly referred to as the “50% rule,” which was also announced to be suspended for one year on November 10; the Netherlands followed suit and suspended the takeover. This matter was originally a request from the U.S. government, either overtly or covertly, for the Dutch government to handle Nexperia, and the Netherlands enforced the takeover after the regulation was issued; now that the regulation is suspended, they will naturally suspend the takeover as well, essentially acting according to the wishes of their big brother.
If the two parties negotiate well, the controls may ultimately be lifted; if negotiations go poorly, it may be continuously delayed, with annual interruptions. The latter scenario is more likely. This means that major global automotive companies will frequently face the threat of chip supply interruptions, and it is uncertain when production might halt. They will inevitably need to find ways to mitigate this risk, which essentially means seeking multiple suppliers, as these chips are mid to low-end products, and many companies can produce them. If worse comes to worst, chips can still be produced in Nexperia’s factories in other countries. In other words, the ones who will suffer are still us; it has just prolonged the timeline from an acute issue to a chronic one. However, if left untreated, problems will ultimately arise. It depends on our wisdom in how to resolve this crisis.
Wentai Technology is estimated to transfer Nexperia.