China to ensure Nexperia chip supply resumes following Trump-Xi talks, White House says

Tensions between Nexperia’s management in Europe and China have continued to escalate. Nexperia confirmed in October that China’s Ministry of Commerce (MOFCOM) issued an export control notice prohibiting Nexperia China and its subcontractors from exporting specific finished components and sub-assemblies manufactured in China. Then, on October 31, Reuters reported that Nexperia informed customers that it had suspended wafer supplies to its assembly plant in China.

Read more: Trump and Xi discuss US-China tariff reduction and rare earths supply

During his trip to Asia, US president Donald Trump met with China’s president Xi Jinping in Busan, South Korea. Although no comprehensive deal could yet be reached, Trump announced a tariff reduction for Chinese imports to the US and China agreed to continue the flow of rare earth minerals to the US.

And in the latest development, an official White House fact sheet published on November 1 has claimed that “China will take appropriate measures to ensure the resumption of trade from Nexperia’s facilities in China, allowing production of critical legacy chips to flow to the rest of the world”.

The fact sheet outlines details of a US-China trade and economic deal reached by the two countries’ presidents at a recent summit in South Korea. This document also states that “China will terminate its various investigations targeting US companies in the semiconductor supply chain, including its antitrust, anti-monopoly and anti-dumping investigations”.

Semiconductor trade between the two countries was one of several matters discussed by Trump and Xi in South Korea. The meeting also resulted in the suspension of global implementation of China’s planned additional export controls on rare earths, critical minerals and magnets that it announced on October 9.

Furthermore, the meeting saw the reduction of the US’ fentanyl-related tariff on China from 20% to 10%, and the decision to delay the US’ introduction of fees on China-based vessel owners and operators, operators of Chinese-built ships and foreign-built car carrier vessels for one year, as negotiations continue. China also agreed to “correspondingly suspend the implementation of its countermeasures against the US side for one year once the US suspension takes effect”.

Read more: Volvo Cars, VW and more warn about Nexperia chip shortage

Volvo Cars and VW have warned that the ongoing shortage in supply of Nexperia semiconductors could affect production.

Uncertainty surrounding the flow of Nexperia chips out of China, following the Dutch government’s emergency seizure of the company, has led to concern over chip shortages from automakers like VW Group and Volvo Cars.

In a recent interview Håkan Samuelsson, chief executive of Volvo Cars, said: “I think there will be some factories shut down.”

Additionally, Stellantis’ CEO Antonio Filosa said during an earnings call on October 30 that the company is “monitoring… on a daily basis the chip situation from Nexperia”. He claimed that Stellantis has a “cross-functional war room” that is keeping track of this as a priority as part of its “day-by-day management of what is an industry-wide global issue”.

According to reports, Nexperia China issued the following update via WeChat on November 2: "At present, Nexperia China has established sufficient inventories of finished goods and work-in-progress, enabling stable and sustained fulfilment of customer orders through year-end and beyond," the company said via its official WeChat account."