Nexperia, a Chinese-owned chipmaker with headquarters in the Netherlands, is at the center of the negotiations.
BEIJING While deeper tensions over trade and EU-China ties remain unresolved, senior Chinese and German officials pressed for steps to restore semiconductor supplies in a high-stakes diplomatic exchange this week aimed at stabilizing a tense trade relationship shaken by the dispute over chipmaker Nexperia.
During a two-day visit to Beijing, German Foreign Minister Johann Wadephul expressed serious concerns about the conflict’s impact on European supply chains and urged Chinese officials to help put an end to the uncertainty that has hampered industrial and automotive production throughout the continent. Beijing, for its part, emphasized that third parties must exercise moderation in order to resolve the issue and called on Dutch authorities to stop what it called “improper administrative interference.”
Nexperia, a Chinese-owned chipmaker with headquarters in the Netherlands, is at the center of the negotiations. Export restrictions and production issues have been brought on by the company’s internal conflict and European regulatory actions. The company’s division between its Chinese and European operations has increased supply concerns for automakers that depend on its commodity semiconductors, leading to a diplomatic rush to prevent broader industrial repercussions. Even though some export restrictions have been loosened.
In meetings with Wadephul, Beijing conveyed two messages: first, it reaffirmed calls for communication between the parties within Nexperia; second, it urged European partners to refrain from politicizing commercial ties; and third, it expressed a willingness to alleviate the current shortages of vital inputs for German industry. Senior trade and foreign ministry representatives, among other Chinese officials, presented the issue as essentially a commercial dispute that Beijing wants resolved rather than letting it develop into a long-term supply weapon.
The stakes are existential for Germany, the biggest economy in Europe and a major manufacturing power. Tighter chip flows and limited access to rare earths and other inputs have already put pressure on German automakers and machinery companies. According to reports from the visit, Wadephul urged China to expedite the issuance of export licenses for materials essential to high-tech manufacturing and to give priority to resolving bottlenecks affecting European producers. Berlin took a measured but firm stance: while commercial integration with China has advantages, domestic industry cannot be jeopardized by strategic reliance.
The Nexperia scandal also highlights a larger European conundrum: how to maintain strategic supply chains while maintaining economic ties with China. Beijing’s ability to influence access to chips and minerals gives it leverage in negotiations with individual EU states, according to commentators. This dynamic has led to calls in Brussels and national capitals to diversify suppliers or put up barriers against coercive trade practices. The episode is an example of how supply-chain control can be used as geopolitical leverage, according to The Guardian and other analyses.
On the diplomatic front, it is significant that there had been a note of realism. It would appear that they prefer containing and managing crises rather than engaging with each other’s confrontational positions. China has encouraged direct talks with Wingtech, whose parent company Nexperia, and the Dutch administrators who are running the operations within Europe. Wingtech has apparently invited administrators from China to talk about controlling the firm. Obviously, there would be complications involved.
As officials head back to capitals on both sides, it will no doubt continue. And so will the larger debate in Europe about how it wants to navigate openness and strategic autonomy. Until then, Nexperia will be a case study on the dangers of industrial dependence and geopolitical ambitions. It’s worth noting here that several weeks before these developments, Nexperia had already made some changes. It had laid off employees and also sold some of its assets. It seems that it wanted to diversify. But it might be too soon for Nexperia. It needs more time.
