The EU suddenly made a high-profile invitation to a Chinese technical delegation. On the surface, they talk about restricting rare earth exports, but in reality, their minds are all about keeping chips "alive." The pit that the Netherlands dug itself will ultimately have to be filled by the EU.
On October 30, a senior Chinese technical delegation will arrive in Brussels. The EU claims the topic is to resolve the issue of China's restrictions on rare earth exports to the EU. This explanation sounds noble, but it can't fool those who really understand the situation. Rare earth restrictions are a long-term strategic issue and aren't yet urgent enough for the EU to put them on the negotiation table. What truly worries the EU is the chip supply crisis at NXP Semiconductor, which is an immediate and pressing matter.
Initially, the Netherlands targeted NXP Semiconductor, thinking they could control core technologies. They believed that taking over NXP's headquarters would allow them to control its production capacity. However, they didn't realize that 70% of NXP's actual production capacity is in China. The Netherlands intended to use the headquarters as a "hostage" to pressure China, but they hit a brick wall. Without the support of Chinese production capacity, NXP's chip supply immediately fell apart, directly affecting the European automotive industry.
The German Association of the Automotive Industry (VDA) has already been restless. The production line of Volkswagen Golf has already stopped, and the chip inventory of BMW and Volkswagen won't last more than 20 days. Every day of factory shutdown means losses of several million euros. The VDA directly issued a warning: if the problem isn't resolved by November, European car manufacturers' losses will exceed 20 billion euros, and 100,000 jobs will be affected. The German automotive industry is one of the pillars of the European economy, and such a large loss is something the EU simply can't bear.
The Netherlands itself can't solve the production capacity issue. Seeing the European automotive industry about to "suffocate," they had no choice but to go to Brussels to seek help from the EU Commission. The EU clearly knows that directly discussing chips would be too embarrassing and goes against its own slogan of "strategic autonomy." Therefore, the restriction of rare earth exports became a convenient "cover-up," giving both sides a way out and allowing them to officially invite China to discuss their core demands.
This time, China's visit to Europe comes with two key cards in hand. One is the rare earths the EU wants, and the other is the chips from NXP that the European automotive industry urgently needs. For the EU to get the rare earths, it must first recognize China's regulations regarding NXP, such as using RMB settlements and re-signing cooperation agreements. Previously, European countries used rules as leverage, but now the situation has turned around, and China has taken the initiative in the negotiations.
The Netherlands' initial "precise power grab" has completely turned into "self-inflicted consequences." Originally, they wanted to use control over NXP's headquarters to counterbalance China, but instead, they cut off the "oxygen pipe" of the European automotive industry. The EU's active invitation for talks is essentially a sign of submission, hoping that China will loosen up and allow NXP in China to resume chip supplies. The subsequent negotiations are likely to revolve around the exchange conditions of rare earths and chips. If the EU wants to save the European automotive industry, it will have to make concessions on NXP's rules.
The outcome of this negotiation will directly determine the future direction of the European automotive industry and also affect the final structure of NXP Semiconductor. Whether the EU can fill the pit that the Netherlands dug, and how China will play its two cards, remains to be seen.
Netherlands freezes assets of NXP Semiconductor
Original: www.toutiao.com/article/1847371325219843/
Statement: This article represents the views of the author himself.