In a stunning conclusion to a month of geopolitical posturing, the Nexperia chip crisis appears to be resolved. But this is no victory for Europe. Instead, it’s a masterclass in strategic maneuvering by China, leaving the Dutch government and Nexperia’s European headquarters as little more than humiliated spectators in their own game.
A Self-Inflicted Wound Festers
The crisis began with a spectacular own-goal by the Dutch government. Pressured by Washington, they seized control of Nexperia, a Dutch chipmaker owned by China’s Wingtech Technology, citing vague “national security” concerns. This move, ostensibly to prevent technology transfer to China, was a direct response to the US introducing its new “BIS 50% rule,” which targeted companies with significant ownership by entities on the US trade blacklist.
China’s retaliation was swift and devastating. It blocked exports from Nexperia’s Chinese facilities, which accounted for 70% of the company’s total production. This triggered a full-blown crisis in Europe’s auto industry, which was heavily reliant on these chips.
The “Resolution”: A Chinese Power Play
Now, a “resolution” has been announced, but it’s one that completely bypasses Europe. The US, in a deal with China, has agreed to suspend the very “BIS 50% rule” that started this whole debacle. Following this, China’s Ministry of Commerce (MOFCOM) announced it would grant export exemptions to Nexperia China.
But here’s the kicker: the deal ensures that trade will resume from China, with Nexperia China, now effectively severed from its Dutch parent, becoming the main contracting party. This isn’t a return to the status quo; it’s a fundamental shift in power.
Recent developments paint an even clearer picture of this new reality:
•Direct Contracts: Nexperia China is reportedly signing new contracts directly with global customers, cutting Nexperia HQ out of the loop entirely.
•RMB Transactions: All new transactions are to be paid in Chinese Yuan (RMB), a significant move to de-dollarize this segment of the supply chain.
•Supply Chain Independence: After Nexperia HQ petulantly stopped wafer shipments to its Chinese counterpart on October 26, Nexperia China simply announced it would switch to Chinese wafer suppliers. This demonstrates that the European fabs were not providing anything irreplaceable.
The Hollow Shell of Nexperia HQ
The implications are stark. Nexperia’s headquarters in the Netherlands is now a hollowed-out shell company. It has been rendered a mere cost center, with no control over production, no revenue stream, and no leverage. It is, for all intents and purposes, bankrupt, a fate likely to be formalized before its interim CEO’s one-year term expires.
Layers of Delicious Irony
The resolution to this saga is dripping with irony:
•Washington’s Backfire: The US “BIS 50% rule,” designed to decouple from Chinese supply chains, has instead decoupled a Dutch middleman, leaving China with more control.
•The Dutch Paradox: The Dutch government’s actions, justified as preventing a move of operations to China, have directly caused that exact outcome.
•Holding the Bag: The US pressured the Dutch to act, then walked back the very policy that prompted the action, leaving their European allies looking like fools on the world stage.
•Sovereignty Lost: In its attempt to defend its “technological sovereignty,” Europe has lost the company, its credibility, and any semblance of control, all while being completely absent from the negotiating table where the final deal was struck between the US and China.
This Nexperia saga is a brutal lesson in modern geopolitics. It demonstrates that in the new global landscape, economic power and strategic foresight are what matter. And in this particular chess match, China has declared checkmate.
It’s a huge win for China! China stands tall on moral ground, consolidate it’s position and security on critical supply chain, reaping economic benefit, while teaching the dutch/EU painful lesson. You couldn’t ask more than that!
It is even worse: the European automotive industry will suffer weeks of standstills and significant price increases from component shortages. They will have no other choice than to switch from Nexperia NL to Nexperia PRC. They cannot even protest as they depend on these supplies.
All because of an act of piracy through the Dutch government that gave the Chinese the perfect excuse to do what they wanted anyway.