Chinese-owned Nexperia invests $200M in Europe

Nexperia, a leading maker of diodes and transistors, announced Thursday that it would invest $200 million to boost capacity at its Hamburg production plant

The investment by Nexperia, a Dutch company owned by the Chinese electronics manufacturer WingTech, is a unique instance of a computer chip investment made in Europe without the assistance of state subsidies under the EU’s Chips Act, which was implemented in 2023.

Additionally, it coincides with the European Union’s investigation into whether China is unjustly subsidizing the domestic production of bare “legacy” chips utilized in automobiles, electric systems, smartphones, and industrial applications. All of

Nexperia’s manufacturing and intellectual property are located in Europe.
In a statement announcing the investment decision, CFO Stefan Tilger stated, “Electric cars, green energy, and digitalization are inconceivable without our products.”

Nexperia produces 100 billion chips annually, which accounts for nearly 25% of the global supply. The company conducts assembly and packaging operations in the Philippines, Malaysia, and China.

In the automotive market, the Netherlands-based company competes with Texas Instruments, Infineon, and NXP, with approximately 10% of sales being directed to clients in China.

According to Nexperia advocacy chief Hannes van Raemdonck, the company is investing to capitalize on trends such as the growing use of semiconductors in automobiles and electrification. “We have a very ambitious, steep growth curve ahead of us,” he stated in an interview with Reuters.

“Everything will simply require more chips to power things, (and) that’s our core business, power semiconductors,” according to him.

STRICTER ANALYSIS

Nexperia has been subject to heightened scrutiny by European governments since WingTech’s acquisition of the company for $3.6 billion in 2018.

Citing security concerns, the British government compelled it to divest a factory in Newport in 2022.

In 2023, the German government denied it the opportunity to receive a subsidy for developing a battery efficiency technology. Additionally, the Dutch government authorized the acquisition of Nowi, a startup, following retroactive vetting.

Van Raemdonck acknowledged that Nexperia competes with Chinese companies and expressed his gratitude for European policies prioritizing its companies’ competitiveness.

Nevertheless, he was skeptical that Chinese companies were investing in overcapacity.

“I don’t think it’s correct to speak of flooding the market,” according to him.

Nexperia intends to establish additional production lines in Hamburg to manufacture two distinct varieties of “wide bandgap” chips employed in electrical infrastructure. These chips are composed of Silicon Carbide (SiC) and Gallium Nitride (GaN).

These processors are preferred over conventional silicon chips due to their efficiency, speed, lightweight, and capacity to operate under high voltages and hot conditions.