Recent reports indicate that Nexperia has suspended salaries and access to work systems for its employees in China. This action underscores the ongoing political tensions between the Netherlands and China. As per a letter from Nexperia’s Chinese unit, employees were informed that salary payments would cease immediately.
Nexperia’s Employee Situation in China
The Chinese subsidiary expressed disappointment, stating, “We are deeply puzzled and disappointed,” as they face what they described as “ruthless suppression.” The current management from Europe is perceived to be distancing itself from the Chinese market.
Corporate Restructuring and National Security Concerns
This freeze on employee accounts follows the Dutch government’s recent move to take control of Nexperia’s management. Earlier this month, the government ousted CEO Zhang Xuezheng due to national security worries. The Dutch authorities feared that Nexperia might relocate chip production from Europe to China, prompting this intervention.
On October 4, in a tit-for-tat response to these developments, China’s Ministry of Commerce issued an export control notice. This notice restricts Nexperia’s Chinese unit and its subcontractors from exporting certain components made in China.
Financial Implications and Local Operations
Nexperia reported revenues of 7.8 billion yuan ($1.1 billion) in the first half of the year, representing 31% of its parent company, Wingtech Technology’s total revenue. Notably, nearly half of Nexperia’s sales during this period came from China.
- Nexperia’s key clients include global automobile and electronics manufacturers like Tesla and Apple.
- Operations at Nexperia’s plant in Dongguan appear normal, though workers fear becoming collateral damage in the geopolitical conflict.
Self-Rescue Measures Implemented
In light of the situation, Nexperia’s Chinese unit has begun implementing “self-rescue measures.” These include establishing a local supply chain to ensure continuity in maintaining supply for domestic customers despite potential financial ramifications from their European headquarters.
The impacts of the recent export controls by the US are also significant, as American companies face new restrictions regarding technology transfers to Nexperia. Such measures are part of a broader effort by the US to manage its export policies in relation to rising geopolitical tensions.
As the situation unfolds, Nexperia’s ability to navigate these challenges will be crucial for its operations in China and its overall business strategy in the semiconductor industry.
