German media: China plans to partially allow NXP Semiconductor exports

The dispute over NXP Semiconductor, which has caused a "chip shortage" panic in the global automotive industry, shows signs of significant easing. On Saturday, China announced that companies can apply for exemptions to regain access to chips produced at NXP's Chinese factory. This is likely part of the trade ceasefire agreement between the U.S. and China two days ago.

On November 01, the Chinese Ministry of Commerce released a statement saying that it will fully consider the safety and stability of domestic and international supply chains, as well as the actual situations of enterprises, and grant exemptions for the export of products from NXP Semiconductor that meet the conditions.

This statement was published on the official website of the Chinese Ministry of Commerce in the form of "Q&A with reporters." The statement emphasized "welcoming enterprises facing actual difficulties to contact the Ministry of Commerce or local commerce authorities promptly," and also reiterated China's repeated views: "Improper intervention by the Dutch government in corporate internal affairs has led to the current chaos in the global supply chain."

Global automotive industry faces shutdown threats

In late September, the Dutch government invoked a Cold War-era law to forcibly take over NXP Semiconductor, a Dutch company controlled by the Chinese firm Winetech Technology. The Dutch government stated that this move was to prevent NXP Semiconductor's technology from being "abused" by its parent company, Winetech Technology. In early October, China responded with countermeasures: products produced by NXP Semiconductor's Chinese factory were no longer allowed to be exported. The Chinese factory also announced it would operate independently from the Dutch headquarters.

NXP Semiconductor is a semiconductor manufacturer based in Nijmegen, the Netherlands. It was previously a department of NXP Semiconductors (formerly Philips Semiconductor). The chips produced by the company are not cutting-edge products like those of NVIDIA or Qualcomm, but rather basic chips used to control car door switches, windshield wipers, etc., with each chip costing just a few cents; due to their large volume, NXP Semiconductor is able to reduce costs through economies of scale, thus achieving a leading position in the market. The company's chips are primarily produced in the upstream stage in Hamburg, Germany, and then about 70% are sent to China for packaging, and finally distributed to the global automotive industry. In a way, NXP Semiconductor is one of the most important chip suppliers for global automotive manufacturers. In addition to the automotive industry, many electronic products such as coffee machines, washing machines, and televisions also use NXP Semiconductor's chips.

After the Chinese government imposed a ban on exporting NXP Semiconductor products, numerous automakers, including German Volkswagen, BMW, Nissan, Honda, Stellantis, faced the risk of shutdowns, and parts suppliers such as Bosch were also affected. Industry experts said that the disruption of NXP chip supplies could lead to inventory shortages for automakers and parts suppliers within just a few weeks.

Three-way game between China, the Netherlands, and the United States

Reuters reported that the White House may soon issue a memo providing more details on the U.S.-China trade truce, which will involve the NXP Semiconductor issue. The U.S. and China held meetings during the APEC Summit in South Korea two days ago and reached an agreement on a one-year trade truce.

In the current NXP Semiconductor dispute, the United States plays an important role: In December last year, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) added NXP Semiconductor's Chinese parent company, Winetech Technology, to the Entity List. On September 29 this year, the U.S. further tightened regulations, automatically adding subsidiaries of entities on the "Entity List" to the "Blacklist," and imposing equivalent export control sanctions on subsidiaries holding more than 50% of the equity of "Entity List" companies. According to the relevant regulations, U.S. companies are prohibited from exporting U.S.-made goods to entities on the list unless they obtain special approval. Court documents from the Netherlands also show that during a meeting between the U.S. Department of Commerce and the Dutch Foreign Ministry on June 12 this year, the U.S. pressured the Dutch government, stating, "The CEO of NXP Semiconductor is still the same Chinese national, which is problematic." "It is almost certain that the CEO needs to be replaced in order to be exempted from the Entity List."

Sources: DW

Original: www.toutiao.com/article/1847588243283968/

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