Nexperia parent shares jump 6% as Beijing signals thaw in tensions with Netherlands

Shares of Wingtech Technology, parent company of chipmaker Nexperia, extended gains on Monday after Beijing agreed to further talks with a Dutch delegation, easing concerns about a global auto supply crunch.

Shanghai-listed Wingtech Technology saw its shares jump as much as 6.4% on Monday, according to LSEG data, after surging 9.7% in the final minutes of trading last Friday on signs of de-escalation in a battle over control of the Dutch-based Nexperia.

The Chinese Commerce Ministry said in a statement Sunday that it had taken steps to allow exports of certain chips from Nexperia’s China facility, while urging the European Union to press the Dutch government to lift restrictions on the firm.

In a separate statement on Saturday, Beijing said that it has agreed to the Dutch government’s request to send representatives to Beijing for talks, and that it hoped the Netherlands would propose “constructive solutions” and take “concrete actions” to resolve the dispute over Nexperia soon.

The move followed a statement from Dutch Economic Affairs Minister Vincent Karremans last Thursday, which suggested Nexperia chips would reach customers in Europe and beyond in the coming days, citing “the constructive nature of our talks with the Chinese authorities.”

China and the U.S. had informed the Netherlands that the trade deal they struck last month would result in the resumption of supplies from Nexperia’s facilities in China, Karremans said. “This is also consistent with information provided by the European Commission by the Chinese Ministry of Commerce,” he added.

The Dutch government seized control of Nexperia on Sept. 30, citing security concerns that the company would shift its operations to China, where its parent company Wingtech is based, prompting Beijing to retaliate by blocking exports of components from Nexperia’s Chinese facility.

The dispute over the ownership and control of the Dutch-based Nexperia led to worries of a global shortage of the chips widely used in industrial, computing, mobile and consumer products.

Carmakers like Volkswagen warned of possible production risks, while Honda slashed its annual profit forecast after halting production at several plants.

Other major automakers, including Stellantis, said they were monitoring the situation around the clock, setting up “war rooms” to explore alternative purchasing methods to mitigate disruptions.

The recent escalation of the dispute over Nexperia was the “direct result” of Beijing’s simmering tensions with the U.S., said Neo Wang, China strategist at Evercore ISI.

Washington in late September expanded its entity list — a U.S. trade blacklist for companies seen as security or foreign policy risks — to include subsidiaries that are 50% or more owned by firms already on the list.

Nexperia is one such subsidiary of Zhejiang-based communications equipment manufacturer Wingtech Technology Co., which was added to the list in December last year, Wang said.

Following a trade truce struck between Beijing and Washington on Oct. 30, which led both sides to scale back some restrictions, China said earlier this month that it would allow Nexperia’s China unit to resume shipments to global customers.

“Beijing appeared unwilling to gamble with bilateral relations [with the Netherlands],” Evercore’s Neo said, as the stakes are high given that the Dutch government controls ASML Holding, the world’s top supplier of advanced chipmaking equipment.

Because of its unique technology, ASML has been a key focus of U.S.-China tensions, with Washington pressuring The Hague to restrict exports to China.

Suppliers have begun receiving chip shipments from China, according to a note on Saturday from a team of auto and mobility analysts led by Dan Levy at Barclays. However, the analysts warned that low chip inventories could still cause disruptions in the near term.

They added that the relief appeared “temporary,” as the core dispute between Nexperia’s Dutch headquarters and its China-based operation remains unresolved.