In a move that highlights the shifting dynamics of the global semiconductor industry, the Chinese subsidiary of Dutch chipmaker Nexperia is turning to domestic suppliers to maintain production amidst a suspension of wafer supplies from its European facilities. This development comes as Nexperia, which is owned by China’s Wingtech Technology, faces scrutiny from Dutch authorities over national security concerns.
The Challenge: A Supply Chain Under Pressure
The disruption stems from the Dutch government’s decision to take control of Nexperia, leading to a suspension of wafer supplies from the company’s European fabrication plants. This has put Nexperia’s China unit in a difficult position, as it relies on these supplies to manufacture chips for a global clientele, including major players in the automotive industry.
The Solution: Tapping into China’s Domestic Ecosystem
In response to the supply chain interruption, Nexperia’s Dongguan-based subsidiary is actively seeking to secure alternative wafer sources within China. According to a report from industrial consultancy Zhineng Auto, several Chinese firms, including Wuxi NCE Power, Hangzhou Silan Microelectronics, and Yangjie Technology, have the capacity to fill the gap.
However, the most likely partner is a sister company of Nexperia’s parent, Wingtech Technology. Shanghai Dingtai Jiangxin Technology, also known as WingSkySemi, recently invested 12 billion yuan (US$1.7 billion) in a new 12-inch wafer fabrication plant in Shanghai. Wingtech has described this facility as a “pivot in its production capacity strategy for the Chinese market,” signaling a strategic move towards greater self-reliance.
Government Support and Customer Reassurance
The Chinese government has also stepped in to support Nexperia. The Ministry of Commerce has indicated that it is considering exempting some of Nexperia’s orders from a potential export ban. This move would provide a crucial lifeline for the company as it transitions to its new supply chain.
Nexperia China has been proactive in reassuring its customers, stating that it has “multiple contingency plans” in place and sufficient inventory to ensure a “secure and reliable” chip supply. The company is accelerating the qualification of new wafer suppliers and is confident that it will be able to meet all customer demands starting next year.
A Sign of the Times
The situation at Nexperia underscores the growing importance of China’s domestic semiconductor industry. As geopolitical tensions continue to impact global supply chains, Chinese companies are increasingly looking inwards to build a more resilient and self-sufficient ecosystem. Nexperia’s ability to navigate this complex landscape will be a key test of this emerging model.
References
[1] How Nexperia’s China unit can meet chip orders amid European fabs’ suspended wafer supply
