Wingtech Turns to Domestic Silicon Wafers Amid Nexperia Supply Dispute

Wingtech Technology, the Chinese owner of semiconductor manufacturer Nexperia's local operations, is actively selecting domestic suppliers for silicon wafers while ramping up packaging capabilities within China. This move comes as the ongoing spat between Nexperia's Dutch parent firm and its Chinese unit disrupts material flow, causing ripples in chip production.

In a recent conversation with Caixin, Wingtech chairwoman Ruby Yang Mu revealed that the supplier selection process is expected to wrap up by the end of the first quarter. This push towards local sourcing aims to stabilize supply chains affected since Nexperia Netherlands halted wafer deliveries following their ownership dispute with Wingtech.

Last year, the Dutch government took control of Nexperia from Wingtech, citing governance concerns. Subsequently, the Netherlands unit ceased silicon wafer shipments to the Chinese division, prompting Beijing to retaliate by blocking exports of finished chips. This tit-for-tat escalated into shortages impacting automakers worldwide who rely on these semiconductors.

The Chinese arm of Nexperia reportedly secured enough local silicon wafers to sustain production of at least one category of power chips through 2026. This step represents a strategic effort to sidestep reliance on foreign raw materials amid political and corporate skirmishes.

Yang also commented on the fragmented control over Nexperia, noting that divided ownership results in duplicated investments and exposes the company to increased competitive risks. She expressed Wingtech's ambition to regain full control, highlighting the corporate tug-of-war that continues despite some regulatory relaxations last month.

Adding to the drama, a Dutch court is scheduled to hear arguments on January 14 about whether to formally open an inquiry into alleged mismanagement within Nexperia. This legal backdrop underscores ongoing tensions that complicate the semiconductor maker's operations and alliances.

From a broader perspective, the localized wafer sourcing signals a shift in China's semiconductor strategy, seeking to build resilience and reduce dependence on foreign suppliers amid a tangled geopolitical environment. While supply lines get reconfigured, the industry watches closely how these maneuverings will affect the global chip market supply and pricing.

The situation around Nexperia raises questions about how semiconductor firms adapt to the clash between government interventions and corporate governance conflicts. Whether Wingtech's approach can fully mitigate the supply chain risks remains to be seen.