In a letter to customers dated October 29, seen by Reuters and signed by interim CEO Stefan Tilger, the company said the decision — effective October 26 — stemmed from the Chinese unit’s “failure to comply with agreed contractual payment terms.”
The suspension marks the latest escalation in tensions between Nexperia and its Chinese subsidiary, following the Dutch government’s takeover of the firm from Chinese owner Wingtech Technology on September 30. The state also removed Nexperia’s Chinese CEO, citing national security concerns that Wingtech could access sensitive technology.
While Nexperia’s Chinese arm had resumed operations and chip deliveries to domestic clients, it had switched to settling transactions exclusively in Chinese yuan, a departure from the usual practice of using the U.S. dollar and other foreign currencies.
“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 company said in the letter. “Unless these contractual obligations are fully satisfied, we cannot resume wafer supply to the site.”
The company stressed that the move did not signal a withdrawal from the Chinese market, adding that it remained committed to resolving the impasse and ensuring continued supply to customers through alternative arrangements. Nexperia also emphasized that it is financially independent of Wingtech, raising its own capital without support from the former owner.
A company spokesperson confirmed the authenticity of the letter but declined further comment, while Nexperia China and Wingtech Technology have yet to issue responses.
The Dutch government said the suspension was a corporate decision, not a directive from The Hague, explaining that its earlier intervention was meant “to preserve production capacity” rather than influence day-to-day operations. It confirmed ongoing talks with EU partners and Chinese authorities to reach a “constructive solution.”
Following discussions with Nexperia executives, EU tech chief Henna Virkkunen said the bloc was seeking a “diplomatic breakthrough” to defuse the standoff while preparing short- and medium-term measures to cushion European manufacturers.
The ripple effects are already being felt across the automotive sector. Stellantis announced it had set up a “war room” to track the evolving supply situation, while Nissan said it had enough semiconductors to sustain production only through the first week of November.
Industry sources told Reuters that prices of some Nexperia chips have surged tenfold in recent weeks, from just a few Chinese cents to as high as three yuan per unit, reflecting mounting scarcity.
The crisis comes amid broader geopolitical tensions over semiconductor control, with China’s commerce ministry earlier this month blocking Nexperia from exporting chips from its Chinese facilities.
Court filings indicate the Dutch government’s seizure of Nexperia was partly influenced by rising U.S. pressure, after Wingtech was added to a restricted export list — underscoring how the global chip supply chain has become a focal point in the struggle for technological dominance between major powers.