Dutch seek solution to stand-off with China over chipmaker Nexperia, while carmakers fret

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By Toby Sterling

AMSTERDAM (Reuters) -The Dutch economy minister spoke to his Chinese counterpart on Tuesday but failed to find a solution to an impasse over chipmaker Nexperia BV, as Germany’s car industry warned it faces possible production shortages if the situation is not resolved quickly.

The Dutch government seized control of Nexperia last month, citing fears the company’s technology would be taken by its Chinese owner, Shanghai-listed Wingtech. China, where most of Nexperia’s chips are packaged, responded by blocking exports of the company’s finished products, alarming European carmakers that rely on them.

Dutch Economy Minister Vincent Karremans said the pair had discussed “further steps toward reaching a solution,” that would be acceptable to all sides. However, his Chinese counterpart Commerce Minister Wang Wentao sounded less conciliatory.

In a statement, the Chinese commerce ministry said the pair had spoken at Karremans’ request and that Wang had said China is opposed to overstretching the concept of “national security.”

“Measures taken by the Dutch side regarding Nexperia Semiconductor have seriously affected the stability of global industrial and supply chains,” the commerce ministry said in its statement.

“China urges the Dutch side to proceed from the overall perspective of maintaining the security and stability of global industry and supply chains.”

Meanwhile Nexperia’s business in China has begun to assert its independence, telling employees they can reject “external instructions”.

Nexperia makes chips that are not considered sophisticated, but that are needed in high volumes and are widely used in the automotive and consumer electronics industries. With most of Nexperia’s chips manufactured in Europe but packaged in China, neither side of the company’s operations would be able to quickly find alternative partners. It is not clear how long customers’ stockpiles can last.

Germany’s auto industry association VDA said governments’ focus should be on “finding quick and pragmatic solutions.”

“The situation could lead to considerable production restrictions in the near future, and possibly even to production stoppages if the interruption in the supply of Nexperia chips cannot be rectified in the short term,” VDA President Hildegard Mueller said in a statement.

The Nexperia dispute adds to global trade tensions hurting European carmakers and their suppliers, including higher U.S. import tariffs and Chinese export curbs on rare earth metals.

(Reporting by Toby Sterling, Rachel More, and Ethan Wang; Additional reporting by Shi Bu in Beijing; Editing by Tomasz Janowski and Susan Fenton)