Exclusive-Nexperia suspends supplies of wafers to Chinese assembly plant, letter shows

By Che Pan and Wen-Yee Lee BEIJING/TAIPEI (Reuters) -Dutch chipmaker Nexperia has suspended supplies of wafers to its Chinese assembly plant, according to a letter addressed to its customers that was reviewed by Reuters, which could exacerbate a supply squeeze that is worrying automakers worldwide. The letter, which was dated Oct. 29 and signed by Nexperia interim CEO Stefan Tilger, said the company imposed the suspension on supplies to its plant in Dongguan, in southern China's Guangdong province, on Oct. 26, saying it was "a direct consequence of the local management's recent failure to comply with the agreed contractual payment terms." Since earlier this month, Nexperia has been locked in a dispute with its Chinese unit after the Dutch government took control of Nexperia from its Chinese owner Wingtech Technology on September 30. It also removed its Chinese CEO, citing concerns that its technology could be appropriated by Wingtech. The company produces large volumes of chips in the Netherlands that are widely used in the automotive and consumer electronics industries. The majority are packaged in China and sold mostly to distributors. "While we have maintained shipments for as long as commercially feasible, continuing the current flow of supply from our front-end sites is no longer justifiable," the letter said. "Unless these contractual obligations are fully satisfied, we cannot resume wafer supply to the site. Nexperia is developing alternative solutions to ensure (that) supply (is) continuing to our customers." Nexperia added that the decision did not reflect an intention to withdraw from its site in Dongguan or from the Chinese market as a whole, adding that it remained committed to finding a resolution to the problem. Nexperia, Nexperia China and Wingtech did not immediately respond to requests for comment. 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. On Oct. 4, China's commerce ministry blocked Nexperia from exporting chips from China. Industry bodies have sounded the alarm over the possible impact on production, with Stellantis saying on Thursday that 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 Che Pan in Beijing and Wen-Yee Lee in Taipei; Writing by Brenda Goh; Editing by Jacqueline Wong and Thomas Derpinghaus)

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