European carmakers fear for production in dispute over chipmaker Nexperia

By Rachel More

BERLIN (Reuters) -European carmakers could face significant disruption to manufacturing without a swift resolution to a trade and intellectual property dispute over chipmaker Nexperia between China and the Dutch government, an industry association warned on Thursday.

The dispute could cause further strain on Europe's automotive sector, whose carmakers and suppliers are already battling tariffs, foreign competition and weak demand.

It also thrusts Nexperia into a trade war between the world's two biggest economies, with U.S. President Donald Trump ratcheting up pressure on tech as China curbs rare earth exports.

SPOTLIGHT ON CHINESE OWNER WINGTECH

ACEA, the European Union's auto association, said it was "deeply concerned by potential significant disruption to European vehicle manufacturing if the interruption of Nexperia chips supplies cannot be immediately resolved".

Carmakers and their suppliers received notice from Nexperia last week that it could no longer guarantee delivery of its chips, the ACEA said in a statement.

"Without these chips, European automotive suppliers cannot build the parts and components needed to supply vehicle manufacturers and this therefore threatens production stoppages," the statement said.

"We hope to get all challenges resolved soon to the best of everyone's interests," a Nexperia spokesperson said.

He said the company could not comment further beyond a statement on Tuesday that said it is engaging with Chinese authorities to obtain an exemption from restrictions.

The Dutch government announced on Sunday that it had as of September 30 taken control of Chinese-owned computer chipmaker Nexperia, citing worries about the possible transfer of technology to Nexperia's Chinese parent company, Wingtech.

Court documents showed the Dutch government's move came after months of rising U.S. pressure on the company. Nexperia was at risk of being impacted by a new U.S. rule that extends export control restrictions to companies at least 50% owned by one or more entities on the U.S. entity list.

Washington put Wingtech, which has 100% ownership of Nexperia, on the U.S. list in late December.

The Chinese commerce ministry issued on October 4 an export control notice prohibiting Nexperia China and its subcontractors from exporting specific finished components and sub-assemblies manufactured in China, according to a statement Nexperia published on Tuesday.

Nexperia chips are not technically sophisticated but are needed in large volumes. Its biggest manufacturing site is in Hamburg, Germany, but most of its chips are packaged and assembled into larger products in China.

AUTOMAKERS, SUPPLIERS WORK TO IDENTIFY RISKS

Volkswagen and BMW are among the carmakers whose supplier networks include Nexperia, with Bosch among the German auto suppliers who use its chips.

Volkswagen and BMW both said production had not yet been impacted by the issues but that they were working to identify potential supply risks.

"We are monitoring the current situation closely and are also in contact with the manufacturer Nexperia, which is one of our suppliers for electronic components," a Bosch spokesperson said.

Mercedes-Benz said it was monitoring the situation and in touch with relevant stakeholders, without giving further details. A spokesperson declined to say whether Nexperia was part of the company's supplier network.

"Stellantis is closely monitoring the situation and collaborating with Nexperia and other suppliers to assess potential impacts and develop mitigation measures," a spokesperson for the carmaker said.

China's commerce ministry, responding to a question on Nexperia, said on Thursday that it opposed interference in the internal affairs of enterprises through administrative means, and that it would take the necessary measures to safeguard the lawful rights and interests of Chinese enterprises.

(Additional reporting by Toby Sterling in Amsterdam, Che Pan in Beijing and Brenda Goh in Shanghai; Editing by Matthias Williams, Mark Potter and Ed Osmond)