Dutch government steps back from Nexperia intervention to pursue talks with China

By Toby Sterling and Eduardo Baptista

AMSTERDAM/BEIJING (Reuters) -A move by the Netherlands to step back from taking control of computer chip maker Nexperia was welcomed by China on Wednesday as a "first step in the right direction" to easing chip supply shortages, following talks between the two governments.

Nexperia and its Chinese owner Wingtech repeated they are at odds, however, while carmakers said supply chain disruptions are not resolved. China's commerce ministry said the Dutch move fell short of fully ending its intervention as it had demanded.

The Dutch government took control of Nexperia on Sept. 30, saying the move was necessary to prevent the company's former CEO from moving European operations to China from its current base in the Netherlands. In response, Beijing halted exports of Nexperia's finished products on Oct. 4, a measure it has since partly relaxed.

DUTCH POSITIVE ABOUT MEASURES TAKEN BY CHINA

Dutch Economy Minister Vincent Karremans said in a statement on Wednesday that his latest move was a gesture of goodwill, and talks will continue.

"We are positive about the measures already taken by the Chinese authorities to ensure the supply of chips to Europe and the rest of the world," he said in a statement.

European Union trade chief Maros Sefcovic said the move would help stabilize supply chains.

Nexperia is a major supplier of basic computer chips to the car industry, and shortages have threatened automotive supply chains, leading to production slowdowns and halts.

BMW, Bosch and Aumovio all said they welcomed the development but that it is too early to judge what impact it will have, while Mercedes-Benz and Volkswagen declined to comment.

Nexperia manufactures most of its wafers in Hamburg, Germany, and then sends them to Dongguan, China to be packaged and sent on to customers.

Germany's auto industry lobby VDA said disruptions as a result of the dispute were far from being resolved, adding further negative effects on production could not be ruled out.

STALEMATE CONTINUES TO THREATEN SUPPLIES

After the Dutch state intervention, Nexperia's Chinese arm declared itself no longer subject to control by European management and on Oct. 26, the European side of the company stopped shipping wafers to it, citing non-payment.

That stalemate continues to threaten supplies, although the Chinese side is now selling down stockpiles of chips it has previously processed, offering temporary relief to customers.

Nexperia said it welcomed the détente between China and the Netherlands but "full restoration of the supply chain requires active further cooperation of Nexperia's entities in China."

It said Nexperia China should have sufficient wafer stockpiles to last several months.

Separately, a Dutch court in October ordered the removal of ex-Nexperia CEO and Wingtech founder Zhang Xuezheng, citing alleged mismanagement. 

The Chinese commerce ministry on Wednesday criticised what it called the Dutch court's "erroneous ruling" and said the decision remains a major obstacle to resolving the standoff permanently.

A spokesperson for Wingtech, which oversees Nexperia's Chinese operations, said it "strongly rejects these accusations" of mismanagement and the Dutch government should end participation in the case, which was brought by the company's European managers.

"The ministry should now file a letter with the (court), explicitly withdrawing its support for the proceedings," the spokesperson added.

The next step in the legal process will be hearings on a formal investigation into mismanagement, a spokesperson for Amsterdam's Enterprise Court said. 

No date has been set.    

(Reporting by Toby Sterling, Eduardo Baptista, Rachel More, and Bart Meijer; Additional reporting by Ilona Wissenbach; Editing by Alexander Smith, Elaine Hardcastle)