Nexperia says payment dispute led to supply break with China
The company cannot guarantee the quality or authenticity of its chips delivered from China after Oct 13
NEXPERIA suspended supplies to its China factory because the local unit refused to make payments, laying bare the internal discord at the heart of a global chip crisis.
The Dutch company, owned by Chinese firm Wingtech Technology, supplies power control chips used by carmakers from BMW to Volkswagen.
It notified customers on Oct 29 that it was halting the direct supply of wafers to its assembly plant in China, which accounts for about half of its pre-crisis volumes.
Nissan Motor on Thursday (Nov 6) warned that the supply of Nexperia components remained fluid, chief financial officer Jeremie Papin said during an earnings briefing.
He estimated the Japanese carmaker’s risk to be at 25 billion yen (S$212.7 million).
Amid a dispute with the government in Beijing, Nexperia said in a statement late on Wednesday that its entities in China had stopped operating in accordance with its company policy, and were ignoring instructions from central management.
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“We cannot oversee if, and when, products from our facility in China will be delivered,” Nexperia said.
Because of “the missing transparency and oversight over the manufacturing processes”, the company said it could not guarantee the quality or authenticity of its chips delivered from China after Oct 13.
The payment dispute raises questions over the financial impact on the Nijmegen-based manufacturer, as the crisis continues to drag on.
The Dutch government triggered a dispute with Beijing by assuming veto powers over Nexperia in late September, over concerns Wingtech was hobbling the chipmaker and threatening the supply of vital components.
The Netherlands cited actions by Wingtech founder Zhang Xuezheng that represented a “misuse of financial resources for the CEO’s self-enrichment, as well as his other companies in China”.
Wingtech has denied those claims and demanded that Zhang get reinstated as Nexperia’s chief executive officer, after he was suspended by an Amsterdam court on Oct 7, following a petition by management.
The intervention gave the Dutch state the right to block or change key decisions.
Beijing retaliated by imposing restrictions on exports of Nexperia’s products.
While China has announced plans to ease export controls, the financial issues and suspended wafer deliveries to the site show that a resolution is not yet in sight.
Nexperia on Wednesday said the China unit’s refusal to pay for the wafers shipped to its factory from European plants is “not an isolated incident”.
It alleged that Nexperia China misappropriated seals to authenticate corporate documents, and sent unauthorised letters with false information to customers, suppliers and employees.
The unit also set up separate bank accounts without authorisation, and directed customers to make payments there, Nexperia said.
Wingtech representatives did not immediately respond to requests for a comment.
To continue fulfilling as many orders as possible, Nexperia continues to ship wafers to other sites. The company also has assembly plants in Malaysia and Philippines.
“We are offering alternative supply chain solutions to mitigate disruption, and maintain continuity of delivery as much as possible,” it said, without providing details. BLOOMBERG
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