Exclusive-Nexperia customers in talks over workaround to skirt Europe-China chip feud, sources say

Core Viewpoint - Nexperia, a Chinese-owned Dutch chipmaker, is facing supply chain disruptions due to a standoff between its European operations and its Chinese packaging plant, prompting customers to seek temporary workarounds to alleviate chip shortages in the automotive market [1][2]. Group 1: Supply Chain Issues - A workaround is being developed by customers to bypass the conflict between Nexperia's European unit and its Chinese packaging facility, which is not a permanent solution and may not be feasible for smaller clients [2][3]. - The standoff was initiated by the Dutch government's seizure of Nexperia over concerns regarding technology transfer, leading to halted shipments of wafers from Europe to China [2][3][7]. Group 2: Impact on Automotive Market - The scarcity of Nexperia chips has negatively impacted the production of cars and parts, affecting major automakers and suppliers such as Volkswagen, Hella, Bosch, Aumovio, and Honda [2][4]. - The Chinese government has provided temporary relief by relaxing export controls on chips produced at the Dongguan plant, which may help alleviate some pressure on car manufacturers [5]. Group 3: Workaround Details - The workaround involves clients purchasing silicon wafers directly from Nexperia's factory in Hamburg and then transporting them to China for final packaging at the Dongguan plant [3][6]. - This approach treats Nexperia as two separate entities for production and packaging, addressing quality concerns while ensuring that both sides are compensated for their work [6]. Group 4: Current Operations - Nexperia halted wafer shipments to its Chinese subsidiary on October 26 due to nonpayment, and the Chinese arm is currently depleting its stockpiles of finished products [7]. - There are ongoing negotiations among various companies to secure exclusive production by sourcing wafers from Nexperia Europe for their own needs [7].