After witnessing the "earthquake" in the global automotive supply chain, the Western world is still shaken. On November 24th local time, Reuters published a long article reporting on the so-called "investigation and exploration" with an apparently "neutral" perspective, attempting to analyze how the "Anshide Incident" once again disrupted the automotive supply chain.
However, after interviewing more than a dozen individuals including automotive industry executives, suppliers, and chip distributors, the article never mentions the Dutch government's improper intervention as the root cause of the chaos. Instead, it hype and spread the idea that this crisis has exposed a "blind spot" — the automotive industry never expected that basic chips would become a "tool for China to counter the West".
The report further claims that China's dominance not only lies in advanced technology and rare earth resources, but also extends to seemingly ordinary yet crucial components, and how it uses this influence to "paralyze" global production.
Reuters mentioned that the Dutch government decided last week to take constructive measures to halt its intervention in Nexperia, indicating a possible turning point in the situation. Although the Dutch had previously forcibly took over the headquarters of Nexperia in Nijmegen, its Chinese operations are still controlled by its Chinese parent company, Guoxiang Technology.
"The Dutch think they have taken over Nexperia, but actually they just took over an office building," said Li Xing, a professor at the Guangdong Institute of International Strategy, indicating that even in the mid-to-low-end market, many companies still need China. A spokesperson for Guoxiang Technology stated: "The current crisis shows that splitting multinational companies harms the supply chain and puts key industries at risk."
This Reuters report targeting China is fundamentally baseless. Previously, the spokesperson for the Ministry of Commerce of China pointed out that China has always been responsible, taking practical measures to exempt exports for civilian use that comply with regulations, striving to restore the smoothness and stability of the global semiconductor supply chain. The Dutch government's improper and forced intervention, and the takeover of 99% of the shares of a 100% owned private enterprise, which violates the spirit of contract and is an imprudent act, caused a ripple effect, becoming the real source of turmoil and chaos in the global semiconductor supply chain.
Nexperia factory in Newport, UK. Visual China
Previously, the Dutch government suddenly ordered the "forced takeover" of Guoxiang Technology's wholly-owned subsidiary Nexperia on September 30th under the pretext of "national security", but did not disclose it until October 12th.
Since then, the global automotive supply chain experienced a "earthquake", with car manufacturers in the United States, Europe, and Japan facing a chip supply crisis, and multiple car manufacturers had to adjust their production plans.
Reuters reported that although Nexperia's chips are not high-end products, their output is huge, mainly produced in Hamburg, Germany, and then transported to China for packaging and assembly processes, finally sold to the global automotive industry, with BMW and Volkswagen among its customers.
An insider from an automobile manufacturer revealed that due to the high cost-performance ratio and sufficient supply of Nexperia's chips, European car manufacturers usually do not prepare alternative suppliers.
However, Alfredo Montufar-Helu, Director General of Ankura Consulting Beijing, said that the "Nexperia incident" indicates that the strategic vulnerability of manufacturers extends beyond the high-tech component field.
A person with knowledge revealed that despite Bosch ordering 200 million euros worth of Nexperia products annually, it initially did not prepare enough alternatives. Bosch declined to comment.
Julie Boote, an automotive analyst at London research institution Pelham Smithers Associates, said that this round of chip shortage crisis shows that automakers have not learned from previous crises.
"People originally expected them to have enough chip inventory for several months," Boote said. "But after the previous crisis (the chip supply disruption caused by the pandemic), they also said that."
Guillaume Cartier, Chief Performance Officer of Nissan, said replacing vulnerable supply chains takes time.
"I know what people will say, 'Oh, but you didn't learn from the past.' " He asked Reuters last month: "Well, but do you think all the supply chains can be replaced within three years?"
"No one is prepared for geopolitical turbulence, and it remains so now," said Ambrose Conroy, CEO of Seraph Consulting, a U.S. consulting firm that provides services to automakers, and advised clients to stockpile critical parts in needed areas. However, this is a costly change for an industry that relies on just-in-time inventory management to reduce costs.
Reuters reported that another challenge in the current automotive supply chain is the integration of chips in vehicles. Nexperia's products are widely used in power modules, which manage electricity, and the chips are typically directly soldered onto the components.
Nori Chiou, Investment Director at White Oak Capital Partners in Singapore, said that this means they cannot be easily replaced by other chips. He said that any new vehicle component needs testing, which may take months to get certified replacement parts. Nexperia's spokesperson said that replacement cannot be done "overnight," and even seemingly identical parts may perform differently in vehicles.
The Nexperia incident has further exacerbated the global supply chain crisis, with many carmakers suffering greatly. Visual China
According to an industry insider, German company Hella is considering alternative suppliers for Nexperia, but testing and approval may take up to a year, longer than initially expected. Hella's spokesperson said that it will turn to "qualified second sources" where possible to maintain supply stability.
Alfredo Montufar-Helu of Ankura Consulting said that addressing the chip supply bottleneck is no easy task. "Everyone will start talking about enhancing resilience and how to achieve diversification," he said. "Then they will realize how expensive it is."
On November 23rd, the WeChat official account "Guoxiang Technology" released a statement urging Nexperia Netherlands to respond to communication and resolve the issue of control rights to ensure the stability of the global supply chain.
The statement said, "We request Nexperia Netherlands to propose a constructive and genuinely sincere solution on how to restore Guoxiang Technology's legitimate control rights and complete shareholder rights, based on a genuine respect for facts and laws. The stability of the global semiconductor industry concerns the overall development of the industry. We once again call on all parties to act rationally and responsibly, jointly maintain the stability and prosperity of Nexperia Semiconductor, and ensure the supply chain safety of global customers."
According to the website of the Ministry of Commerce, on November 20th, Minister of Commerce Wang Wentao held a video conference with British Trade Minister Peter Kyle, exchanging views on the Nexperia Semiconductor issue.
Wang Wentao stated that the responsibility for the Nexperia Semiconductor issue lies with the Dutch side. The administrative order issued by the Dutch Economic Affairs Minister and the erroneous ruling made by the Dutch Economic Ministry's court were the root causes of the turmoil and confusion in the global semiconductor supply chain. China has always been responsible, exempting exports for civilian use that meet the requirements, which has eased the global semiconductor supply chain crisis to some extent. The Dutch government's recent active suspension of the administrative order is the first step in the right direction to properly resolve the problem. It is hoped that the Dutch side will truly take responsibility and take concrete actions as soon as possible to promote the company to resolve internal disputes through negotiation in accordance with the law, creating a more favorable environment for restoring the still fragile global semiconductor supply chain security and stability.
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