Global car makers warn of shutdown except for those in China

GLOBAL car makers from Germany, the rest of Europe and as far away as Japan, are at risk of shutting down their production lines as the blowback from Netherlands’ decision to seize a Chinese-owned chipmaker started to affect the global supply chain.

Bowing to United States pressure to join the campaign to hinder the development of China in all fronts, the Dutch government last October 12 and in collusion with the Amsterdam Court of Appeals, announced last October 12, the confiscation of ‘Nexperia,’ a subsidiary of ‘Wingtech Technology,’ a global private Chinese company.

With the seizure, Nexperia’s chief executive officer (CEO) and majority shareholder, Zhang Xuezheng was also removed, CNN reported on October 15. The state-sponsored theft of Nexperia would last for at least one year, the report added.

Nexperia, a formerly ailing Dutch company bought and brought to life by Wingtech in 2019 has other production facilities in the UK and Germany.

However, 80 percent of its annual production of more than 100 billion in various computer chips are made, tested and packaged in mainland China, in its 80,000 sqm facility in Guandong Province.

Z2Data.Com, which tracks development in the electronic supply chain industry, noted in its report on October 22 that Nexperia supplies 60 percent of the electronic chips used by

Toyota, Volkswagen, BMW and Mercedez Benz, among others, while also cornering 40 percent of the global market for basic chips like transistors and diodes used in the assembly of ‘ECUs’ (electronic control units) of all vehicles.

80 percent of Nexperia’s annual production of more than 100 billion in various computer chips are made, tested and packaged in mainland China, in its 80,000 sqm facility in Guandong Province.

Although Netherlands continue to claim that US pressure has nothing to do with its decision to seize the company on national security ground, the court filings mentioned in the CNN report noted that it is under pressure from the US Department of Commerce’s Bureau of Industry and Security (BIS) to take action since June.

In 2024, the US decided to place Wingtech in the BIS’ ‘Entity List’ that effectively amount into a trade sanction.

Last September 29, the Commerce Department further expanded its sanction on China and Chinese-owned businesses by coming out with an ‘Affiliate Rule’ where companies that are at least “50 percent owned” by Chinese firms, like Nexperia, would also be sanctioned by the United States.

This stupid and spineless decision by the Dutch government in order to get in the good graces of US Imperialism can pave the way for the decimation of Western car manufacturers—who are already struggling to compete with China in the EV market– and the complete dominance of the global automobile market by Chinese carmakers.

Vowing to America’s pressure, the Dutch government decided to confiscate Nexperia under its ‘Goods Availability Act,’ claiming its Chinese ownership “posed a threat to the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities.”

A stupid, spineless decision that backfired

China did not take the confiscation sitting down, however.

In a memorandum from Nexperia’s management based in China released to the media on October 19, it said that Nexperia is “a Chinese company with operations rooted in China.”

Beijing also issued tight export control on Nexperia products made in China that effectively shut them off from being exported to its customers abroad.

Chinese Commerce Minister Wang Wentao blamed the Netherlands for the impending supply chain fallout.

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

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

As the standoff continues, Volkswagen on October 22 advised its workers that production would have to stop by the end of October, a warning also released by BMW.

The next day, Japanese Automobile Manufacturers Association (JAMA) said Nexperia advised its car parts manufacturers that delivery of its products can no longer be guaranteed.

“If the shipment of automotive chips doesn’t resume – quickly – it’s going to disrupt auto production in the U.S. and many other countries and have a spillover effect in other industries,” added John Bozzella, CEO of the Alliance for Automotive Innovation (AAI), as quoted in the Z2 report.

The AAI’s European counterpart, the European Automobile Manufacturers Association (ACEA), bewailed that it could take months for European automakers to find alternative suppliers for the chips they source from Nexperia. Their supply, meanwhile, is only expected to last for another few weeks.

“We suddenly find ourselves in this alarming situation,” ACEA Director General Sigrid de Vries said in a separate statement.

“We really need quick and pragmatic solutions from all countries involved.”

This stupid and spineless decision by the Dutch government in order to get in the good graces of US Imperialism can pave the way for the decimation of Western car manufacturers—who are already struggling to compete with China in the EV market– and the complete dominance of the global automobile market by Chinese carmakers.