China criticized the Dutch government for not taking enough steps to resolve a dispute over chipmaker Nexperia, which has spiraled into a supply crunch for the auto industry. 

China’s ministry of commerce urged the Netherlands to “stop interfering” in Nexperia’s internal affairs and find a constructive solution to the dispute, according to a statement on November 4. 

The public criticism came after the government in Beijing announced on November 1 that it would grant exemptions to Nexperia’s exports from China. So far, there hasn’t been signs of movement from the Dutch side, which triggered the dispute by sidelining the chipmaker’s Chinese owner Wingtech Technology Co. in late September over claims it was stealing technology. 

“The Netherlands continues to act unilaterally without taking concrete steps to resolve the issue, which will inevitably exacerbate the adverse impact on the global semiconductor supply chain,” China’s ministry of commerce said. 

The Dutch state assumed veto powers over the Nijmegen-based Nexperia, citing actions by Wingtech’s founder Zhang Xuezheng that it said posed a threat to the chipmaker’s viability. Wingtech has rejected the allegations and demanded Zhang’s reinstatement as Nexperia’s chief executive officer after his suspension by an Amsterdam court on October 7. 

China retaliated to the Dutch actions by banning exports of Nexperia’s products from the company’s key assembly plant in Guangdong, which accounts for about half of the chipmaker’s pre-crisis volumes. Nexperia followed up by freezing shipments of wafers to the site.

The standoff has prompted automakers and suppliers to slow production over concerns about shortages of Nexperia components, including transistors and logic chips. Volkswagen AG, Europe’s largest carmaker, said on November 3 that it was reviewing alternative sourcing options and has said its production is secured through this week. 

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The supply situation is “definitely not resolved yet,” Klaus Rosenfeld, the CEO of Schaeffler AG, a German supplier to auto and industrial companies, said on a conference call with analysts on November 4. “We have so far managed through this.”

China’s ministry of commerce has been engaging with European Union companies in recent days to restore the partial flow of chips, European Commission spokesman Olof Gill said. The interaction “avoids a worst-case scenario and creates time and space for China and the Netherlands to find a stable, lasting solution,” he added.

For the auto industry that could mean a shift away from Nexperia, which adds pressure on both China and the Netherlands to resolve the spat. 

“Our industry contacts tell us that they will solve the Nexperia chip supply crunch by Christmas,” said Simon Schnurrer, a partner and sector lead for automotive at consultancy Oliver Wyman. “You can usually substitute Nexperia chips with other manufacturers within weeks or months.”

The Dutch ministry of economic affairs remains in contact with Chinese authorities and international partners to work toward a “constructive solution that is good for Nexperia and our economies,” a spokesperson said.