“Packaging” is a critical link in chip manufacturing that is easily vulnerable to being "strangled." Once the supply of wafers from upstream is halted, production immediately grinds to a halt. Recently, Dutch Nexperia has suspended the supply of wafers to its packaging plant in China, attempting to control upstream resources and "strangle" the supply chain.
Netherlands has played a smart move, but it's not necessarily wise.
Although packaging plants depend on wafers, "import dependence" has become a thing of the past, and "China Manufacturing" is becoming the main player. China Nexperia has been deeply integrated into the local supply system. The action by Dutch Nexperia not only fails to exert effective pressure, but also prompts domestic Chinese wafer manufacturers to gain more orders.
On October 31, according to Reuters, Dutch Nexperia sent a letter to its clients on October 29, stating that it had suspended the supply of wafers to its packaging factory in Dongguan, China, on October 26, citing the reason that "the local management failed to comply with the payment terms stipulated in the contract."
In fact, this "dispute over terms" is related to the adjustment of the payment method. After China Nexperia resumed independent operations on October 23, it changed the settlement currency from USD to RMB. Considering that at that time, Nexperia Semiconductor was included in the U.S. export control list, continuing to use USD for settlement carried the risk of funds being frozen, so RMB settlement is a reasonable and compliant risk control measure, and does not constitute a breach of contract.
Moreover, when the Dutch government took over Nexperia Semiconductor, it provided no specific evidence and did not fulfill the legal judicial review procedures. It is essentially a robbery under the guise of a contract. It has no right to talk about contract spirit in front of China.
It is worth noting that in the Nexperia incident, contract spirit has already given way to geopolitical calculations. This act of cutting off wafer supplies under the name of "payment terms" is not a simple commercial dispute, but an escalation of the struggle for control.
Stefan Tielgert, the interim CEO of Dutch Nexperia, stated in the letter: "Unless the relevant contractual obligations are fully fulfilled, Dutch Nexperia cannot resume the supply of wafers to the factory."
Wafers are made of high-purity silicon, and they are the basic materials for chip production. After the circuitry of the chips is etched onto the wafers, each wafer can produce hundreds to thousands of chips. Then, after dicing, packaging, and testing, the final usable chip products are formed.
Nexperia produces a large number of basic chips and holds nearly 40% of the global automotive transistor market share.
The chip production process is usually composed of two parts:
The upstream part includes wafer factories and material suppliers: responsible for chip design and wafer production. Nexperia's wafer factories are mainly located in Europe. For example, there is a wafer factory in Hamburg, Germany, which has a monthly output of over 35,000 wafers.
The downstream part includes packaging and testing: responsible for dicing the wafers, connecting the circuits, and testing the reliability. The Dongguan packaging factory is Nexperia's largest packaging and testing base, undertaking approximately 70% of its global product packaging tasks.
This explains why the outside world says that what the Dutch government has obtained is just an empty shell.
The Dutch government's takeover caused two management teams to emerge within Nexperia. Nexperia Netherlands controls technology and wafer production, while Nexperia China holds the packaging and testing capacity.
Therefore, cutting off the wafer supply is a clear warning from Dutch Nexperia to China Nexperia, but it ignores the fact that Chinese domestic wafer manufacturers have already possessed the ability to replace it.
Faced with the supply disruption crisis, China Nexperia demonstrated strong supply chain resilience: quickly sorted out the domestic supply chain, connected with local raw material and packaging/testing companies, and resumed domestic supply on the 23rd. Parent company WenTai Technology has already established solid cooperation with domestic enterprises such as SMIC and Hua Hong Semiconductor, ensuring the stability of raw materials.
The actions of Dutch Nexperia not only fail to exert pressure, but also push orders to domestic manufacturers. For domestic wafer producers, this is a "windfall." In 2024, the proportion of domestic wafer procurement by Nexperia has risen to 65%, and the actions of the Netherlands have inadvertently promoted the tighter integration of China's supply chain.
Dutch mistakenly believes that China Nexperia only relies on a single upstream source in Europe, but it doesn't realize that it has already deeply rooted itself in the Chinese manufacturing network.
In its letter, Dutch Nexperia specifically added that this supply cut does not represent the company's intention to withdraw from the Dongguan factory or exit the Chinese market, and it is still seeking a solution to the problem. Behind this statement, it is actually a longing for the Dongguan packaging factory, and the core reasons are two:
On one hand, it has been a month since the Dutch forced the takeover of Nexperia, yet it has still not found an alternative base for the Dongguan factory;
On the other hand, the Netherlands is more worried about the potential for increased countermeasures from China, because the Chinese market is crucial to Nexperia — companies like BYD, Huawei, and Lenovo contribute over 45% of the orders. Nexperia's recovery from the brink of bankruptcy was precisely supported by the Chinese market. If China directly restricts Nexperia Netherlands' products from entering the Chinese market in the future, it would cause serious damage.
More importantly, the Netherlands is still deeply dependent on China for rare earth materials. Its rare earth imports exceed 80% from China. Although the Netherlands is not a major user of rare earths, its high-tech industry is highly dependent on rare earth materials: from ASML lithography machines, NXP chip manufacturing, to motors in new energy vehicles and wind turbines, all require rare earth elements such as neodymium, dysprosium, and terbium. If China uses the "ace" of rare earths, the Netherlands' high-tech industry will face a shutdown risk.
Additionally, China could implement a penetrating sanction, prohibiting any enterprise or individual related to Dutch Nexperia from entering the Chinese market, restricting their participation in import and export activities and investment within China. In this case, the Nexperia forcefully taken over by the Netherlands will not become a "cash cow," but rather a "money-losing asset."
Considering China's countermeasures, Dutch Nexperia has actively left room for negotiation, willing to resolve the current differences through consultation.
Currently, Sino-EU negotiations are underway on issues such as rare earth control and Dutch Nexperia. The worst outcome is that Dutch Nexperia will be completely taken over by a domestic company in the Netherlands.
At this time, Dutch Nexperia specifically wrote to customers to explain the wafer supply cut, with the core purpose of tarnishing the quality of China Nexperia's products. This is not the first time it has taken similar measures; previously, it claimed that the quality of China Nexperia's products could not be guaranteed, but this claim has been clearly refuted by China Nexperia, and it emphasized that all products meet the standards.
Frequent hype about quality issues by Dutch Nexperia is essentially due to its concern that during the supply cut period, its global market share may be taken over by China Nexperia. For customers, the primary consideration is whether they can quickly obtain qualified products, and currently, China Nexperia has gained an early advantage in supply efficiency, which is the most anxious point for Dutch Nexperia.
Nexperia Semiconductor's cut-off of wafer supply to its Chinese factory has directly exacerbated the tension in the chip market supply disruption. The prices of related chips have experienced explosive growth. According to chip procurement personnel, a chip that was priced at $0.8 ten days ago now has a market price of $30, with an increase of dozens or even hundreds of times.
In this round of supply crisis, China Nexperia has instead seized the opportunity for development, and is expected to achieve revenue growth. These series of measures not only allow China Nexperia to quickly fill the market supply gap, but also bring a large number of orders to domestic Chinese wafer manufacturers, directly activating the coordinated development of the domestic semiconductor industry, further accelerating the process of China's semiconductor industry's independent control.
There is no denying that China has suffered considerable losses in the Nexperia incident. China has always participated in international affairs with a peaceful development approach, but this respect for rules and restraint has become a "weak spot" that some countries can exploit.
Nexperia Semiconductor is a semiconductor force nurtured by Chinese enterprises through hundreds of billions of investments, years of technological research and development, and industrial cultivation. Now, its core assets and technical achievements have been forcibly taken away, which is not only a direct loss of interests, but also serves as a warning to all Chinese enterprises investing overseas — when China acquired Nexperia, the Netherlands had no objections; now, when the enterprise has achieved success in the global market, the Dutch government suddenly used administrative power to "plunder" it, completing a series of operations such as removing the Chinese management team, quick court approval, and seizing core equity within a few days.
Behind this, there is certainly the encouragement from the United States and the tolerance from Europe, but the active greed of the Dutch government is the key. In the context where European technological competitiveness is gradually lagging behind China and the United States, some European forces have regressed to the old era of "pirate plundering," discarding commercial contracts and market rules. This once again proves that overseas investment, especially in high-tech sectors, is always accompanied by high risks, and a slight misstep may result in the entire "takeover" of the results.
China upholds the principle of peaceful development, but it never lacks the strength to counteract decisively. The Netherlands may seem tough at the moment, but the core reason is that Europe has not yet clearly expressed its position — the United States has temporarily "ceased hostilities" with China, but Europe still wants to gain more leverage through games, which gives the Netherlands the courage to persist.
The outcome of the Sino-European negotiations has already hidden clues: European brands are highly dependent on the Chinese consumer market, and key raw materials such as rare earths are imported from China by more than 80%. Once China initiates countermeasures, almost all European industrial supply chains will face the risk of shutdown.
More importantly, in the case of Nexperia Semiconductor, the interests of China and Europe are consistent! The chip shortage crisis has had a significant impact on the European automotive industry. For example, the Chinese chip export restrictions have had a huge impact on German car manufacturers! The production of Volkswagen's Golf model has already been suspended!
Moreover, Europe itself has very few negotiation cards. In the end, the Netherlands will probably pay a price for this "seizure." Previously, WenTai has requested the Dutch government to compensate several billion euros.
Unless the Netherlands and Europe are willing to give up the massive trade cooperation of over 700 billion U.S. dollars with China every year, they will eventually yield before reality.
Original article: https://www.toutiao.com/article/7567411789126713898/
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