US to announce Nexperia's China facilities will resume shipments, source says

By David Shepardson

WASHINGTON (Reuters) -The White House plans to announce that Dutch chipmaker Nexperia's China facilities will resume shipments, a source said, in what would be a relief for auto manufacturers worldwide who faced the imminent prospect of curbing production.

The Dutch government seized control this month of Nexperia, owned by Chinese company Wingtech. The move prompted Beijing to block Nexperia products from leaving China.

The company produces large volumes of semiconductors in the Netherlands that are widely used in autos and consumer electronics. Some 70% of the Netherlands-produced chips are packaged in China and sold mostly to distributors.

The Chinese Commerce Ministry appeared to confirm the source's comments in a statement, saying it will consider exemptions for Nexperia chip exports from the country.

"As a responsible major country, China fully considers the security and stability of domestic and international production and supply chains," the ministry said, adding companies facing difficulty obtaining parts should contact Chinese authorities. "We will comprehensively consider the actual situation of the enterprise and exempt eligible exports."

The White House did not immediately respond to a request for comment. It is expected to soon release a fact sheet offering more details on a trade truce between the U.S. and China that included Nexperia and was struck at a summit between U.S. President Donald Trump and his Chinese counterpart Xi Jinping in South Korea this week.

Nexperia makes basic, inexpensive power control chips such as transistors and diodes that cost only a few cents to buy. However, such chips are needed in almost every device that uses electricity.

In cars, they are used to connect the battery to motors, for lights and sensors, for braking systems, airbag controllers, entertainment systems and electric windows.

Automakers have warned the White House that without a steady supply of chips, significant U.S. auto production would begin to shut down in the coming weeks.

Honda suspended production at a Mexican plant on Tuesday, and has started to adjust production in the U.S. and Canada, a spokesperson said.

Reuters reported on Friday that Nexperia suspended supplies of wafers to its Chinese assembly plant, according to a letter addressed to its customers, which could exacerbate the supply squeeze.

Court filings showed that the seizure by the Dutch government came as U.S. pressure was rising on Nexperia after Wingtech was placed on a restricted-export list, though Dutch authorities say governance shortcomings were the trigger.

Industry bodies have sounded the alarm over the possible impact on production. On Thursday, Stellantis, which makes Jeep SUVs, said it had set up a "war room" to monitor the situation.

Japanese automaker Nissan said it had enough chips at the moment to last until the first week of November without disruption.

(Reporting by David Shepardson; Editing by Scott Malone, David Gregorio and Muralikumar Anantharaman)