Nexperia says it halted supply after China unit refused to pay

Nexperia said that it suspended supplies to its China factory because the local unit refused to make payments, laying bare the internal discord at the embattled automotive chipmaker.

The Dutch company, owned by Chinese firm Wingtech Technology, supplies power control chips used by automakers from Volkswagen to BMW. It notified customers on Oct 29 that it was halting the direct supply of wafers to its assembly plant in China.

Nexperia said that its entities there had stopped operating within the established corporate governance framework and were ignoring global management’s instructions, according to a statement late Wednesday (Nov 5).

“We cannot oversee if and when products from our facility in China will be delivered,” the Nijmegen, Netherlands-based firm said. “Given the missing transparency and oversight over the manufacturing processes, we cannot guarantee the intellectual property, technology, authenticity and quality standards for products delivered from the Nexperia facility in China as at Oct 13.”

The Dutch government assumed veto powers over Nexperia in September over concerns that Wingtech was hobbling the chipmaker and threatening the supply of vital components. China retaliated by imposing restrictions on exports of Nexperia’s products, a standoff that put the auto industry’s supply chain at risk and forced carmakers to slow production.

Nexperia on Wednesday said that the China unit’s refusal to pay for the wafers shipped to its factory “is not an isolated incident.” It alleged misappropriation of Nexperia China entities’ corporate seals without legitimate cause or explanation, and said the unit sent unauthorised letters with false information to customers, subcontractors, third-party suppliers and employees. Wingtech representatives did not immediately respond to requests for comment.

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Nexperia China also established “unauthorised bank accounts and was directing customers to remit payments to these accounts”, it said in the statement.

China this week criticised the Dutch government for not taking enough steps to resolve the dispute after Beijing announced Nov 1 that it would grant exemptions to Nexperia’s exports from China.

The chipmaker, while welcoming China’s commitment to the restoration of the supply chain, on Wednesday said that it hoped to see further details on the conditions, criteria and procedures on lifting of the curbs. BLOOMBERG