Nexperia, a leading global manufacturer of fundamental semiconductors such as diodes and transistors, announced on Thursday a $200 million investment to enhance the capabilities of its primary facility in Hamburg, Germany.
Owned by WingTech (600745.SS), a Chinese electronics manufacturer, and headquartered in the Netherlands, Nexperia’s move marks a notable instance of chip investment in Europe that does not rely on EU state subsidies under the 2023 Chips Act.
This development occurs amidst the European Union’s scrutiny over potential unfair subsidies by China to its domestic producers of basic “legacy” chips, which are integral to automobiles, electrical systems, smartphones, and industrial uses. All of Nexperia’s production and intellectual properties are located within Europe.
“Our products are indispensable for electric cars, green energy, and digitalization,” stated CFO Stefan Tilger, emphasizing the critical role their components play in advancing new technologies. Nexperia annually produces 100 billion of these chips, accounting for nearly one-quarter of the global output, with assembly and packaging processes conducted in China, Malaysia, and the Philippines.
Nexperia, which rivals companies like Texas Instruments (TXN.O), Infineon (IFXGn.DE), and NXP (NXPI.O) in the automotive sector, exports approximately 10% of its products to Chinese customers.
According to Nexperia’s advocacy chief Hannes van Raemdonck, the company is positioned for significant growth to leverage trends such as vehicle electrification and the rising semiconductor demand in automobiles. “The need for more chips to power various applications is growing, and that aligns perfectly with our expertise in power semiconductors,” he said.
HEIGHTENED OVERSIGHT
Since WingTech’s $3.6 billion acquisition in 2018, Nexperia has faced increased scrutiny from European governments. In 2022, the UK government compelled the sale of its Newport facility over security concerns, and in 2023, the German government excluded it from subsidies aimed at battery efficiency technology. Moreover, the Dutch government allowed its acquisition of Nowi, a startup, only after retrospective evaluation.
Van Raemdonck acknowledged competition with Chinese firms and valued European strategies that maintain competitive parity. However, he expressed skepticism regarding the claims of overinvestment by Chinese entities. “The notion of market saturation doesn’t align with reality,” he explained. “While I can’t comment on China’s strategy, it appears their expansion primarily caters to local needs.”
Nexperia plans to introduce production lines in Hamburg for two types of “wide bandgap” chips, using Silicon Carbide (SiC) and Gallium Nitride (GaN). These chips are preferred over traditional silicon for their efficiency, speed, lightweight nature, and capability to operate under extreme conditions and high voltages.
