"We are back." Zhang Qiuming, CEO of Nexperia China, remarked with emotion on August 22, 2026.
On that day, Nexperia China released multiple power semiconductor products based on 12-inch wafer R&D and established ample inventory reserves for supply.
But eleven months prior, Nexperia China was deeply embroiled in a "guarantee delivery" storm.
On September 30 last year, administrative and judicial intervention from the Netherlands cut off Nexperia China's supply of 6–8 inch wafers from overseas, throwing the delivery of related chip products into significant uncertainty.
"At that time, the outside world wondered if we could survive. Today, with three of our product lines now established on the 12-inch wafer platform, we have answered that question," Li Dongyue, Chief Commercial Officer of Nexperia China, told the Economic Observer. Over the past eleven months, Nexperia China has completed a series of tasks, including migrating product lines from 8-inch to 12-inch wafers, shifting the supply chain from overseas dependence to local self-reliance and controllability, and increasing the localization ratio from less than 20% to 100%....
Zhang Qiuming said that this transformation of Nexperia China is not about confrontation, but more about protecting customers, employees, the industry, and ensuring globalization can continue.
Survival Against the Odds
Nexperia is a classic case of global division of labor in the semiconductor industry.
Nexperia first manufactures 6–8 inch wafers at production bases in places like Hamburg, Germany and Manchester, UK. These wafers are then shipped to production bases in China for large-scale packaging and testing to produce various automotive-grade semiconductor chip products, including diodes, transistors, MOSFETs (Metal-Oxide-Semiconductor Field-Effect Transistors, abbreviated as "MOS"), logic ICs (chips), and ESD (Electrostatic Discharge) protection devices.
In recent years, Nexperia has delivered over 110 billion automotive-grade chip products globally each year. Among these, its automotive-grade PowerMOS chip products rank second globally, and its global market share for automotive-grade power semiconductors exceeds 30%.
However, with the administrative and judicial intervention from the Netherlands, this global division of labor model in the semiconductor industry came to an abrupt halt.
In late October last year, after Nexperia in the Netherlands decided to stop supplying wafers to the packaging and testing factory in Dongguan, Nexperia China could no longer obtain stable 6–8 inch wafers from production bases like Hamburg, Germany and Manchester, UK for packaging, halting the large-scale production of automotive-grade chip products.
Zhang Qiuming referred to that period as the "darkest hour" for Nexperia China: the overseas supply of 6–8 inch wafers was cut off, systems were disconnected, overseas data platforms became inaccessible. Even though the company had orders and customers, there were no wafers to process and produce for delivery.
Facing the wafer supply cut-off, downstream companies panicked, inquiring daily: "Can Nexperia China continue to supply?"
Zhang Qiuming told the Economic Observer that during this period, the company inventoried all available stock, reassigned personnel, and made every effort to maintain chip shipments.
"Within less than a month, we delivered over 11 billion chips to more than 800 customers, finally stabilizing our clients," Li Dongyue admitted to the Economic Observer reporter. During the most critical period of ensuring deliveries, Nexperia China even introduced a wafer foundry processing model, where downstream automotive and industrial equipment manufacturers provided their own compliant wafers, and Nexperia China assisted with packaging, production, and testing before delivering the finished chips back to them.
However, inventory would eventually run out. Finding a sustainable way to secure production capacity became an urgent challenge for Nexperia China's management.
At that time, Nexperia China did not choose to restore production lines based on 6–8 inch wafers. Instead, it decided to upgrade all product technologies accumulated over the past 60 years from the 6–8 inch platform to the 12-inch platform.
"This was definitely not a hastily launched contingency plan," Pang Yibing, General Manager of Nexperia China's Bipolar Division, told the Economic Observer reporter. The 12-inch platform was chosen because it aligns with the future development trend of the automotive-grade chip R&D industry. Years ago, Nexperia China had already begun promoting the migration of automotive-grade chip products like power MOS, IGBTs (Insulated-Gate Bipolar Transistors), and logic ICs to the 12-inch platform.
Pang Yibing revealed that in terms of product standards, Nexperia China could have chosen to produce 5–6 inch automotive-grade chip products. However, as downstream companies' demands for chip performance, reliability, and consistency increase, the upgrade potential of these older-sized chips is clearly limited. In terms of manufacturing conditions, domestic partners already possess 12-inch wafer manufacturing platforms with ample supply. Nexperia China had the opportunity to place its production lines directly on the new platform without needing to patch up old 6–8 inch wafer lines. In terms of product portfolio, Nexperia China has the capability to R&D and produce power MOS, logic ICs, and discrete devices on the 12-inch platform, quickly unleashing economies of scale.
Li Dongyue told the Economic Observer reporter that Nexperia China's choice of the 12-inch platform was also based on three practical considerations: First, 12-inch wafers reduce unit chip production costs by 20–30%. Coupled with the localization of the supply chain, cross-border freight, tariffs, and long-cycle inventory costs are significantly reduced, making products more price-competitive with equivalent performance. Second, compared to an overseas delivery cycle of 12–16 weeks, the production and delivery cycle for automotive-grade chips based on a domestic supply chain is reduced to 4–6 weeks, more than doubling delivery efficiency. Third, the 12-inch platform, paired with new-generation chip manufacturing processes, offers better performance, more comprehensive specifications, and can meet downstream companies' demands for chip safety and reliability.
Li Dongyue revealed that internally at Nexperia China, the 12-inch platform is seen as the key cornerstone for completely breaking free from dependence on overseas wafer supply and achieving supply chain self-reliance, controllability, and capacity recovery.
Capacity Recovery
In Pang Yibing's view, moving to the 12-inch platform is not simply about transferring old products to a larger piece of silicon wafer for packaging and production. Behind it lies a reconstruction of product standards, manufacturing efficiency, and supply chain capabilities.
The 12-inch platform requires more advanced lithography and polishing equipment to ensure the dimensional accuracy of automotive-grade chip devices is improved by 30% compared to the 8-inch platform. To make the yield of automotive-grade chips produced on the 12-inch platform outperform the 8-inch, the former must be designed from the outset with fully automated handling and advanced process control to significantly reduce particulate contamination and human error risks.
To achieve extremely high product consistency and reliability, the full-process AEC-Q standards (a series of automotive certification standards developed by the Automotive Electronics Council) must permeate every aspect of 12-inch wafer production, ensuring its quality meets the IATF 16949 standard—the quality management system standard for the automotive industry formulated by the International Automotive Task Force (IATF).
Li Dongyue admitted that the biggest challenge for mass-producing high-performance automotive chips on the 12-inch platform is not a single technological breakthrough, but the indispensability of platform, process, and system. For example, the continuous improvement of chip yield mainly relies on engineers repeatedly optimizing the platform and processes through debugging.
"How to achieve highly consistent quality and performance across tens of millions of automotive-grade chips is the hardest part," Li Dongyue said. To tackle these challenges, Nexperia China first needed to solve the problem of stable 12-inch wafer supply.
Starting this year, Nexperia China conducted technical alignment and sample validation with several domestic wafer manufacturers, gradually building a primary + backup 12-inch wafer supply system.
This process was also full of twists and turns. Initially, the 12-inch wafers provided by several domestic manufacturers struggled to meet the requirements for high-performance automotive-grade chip production. Fortunately, through technical磨合 (磨合 –磨合,磨合? The Chinese text says "磨合", meaning磨合/gelling/磨合 through cooperation), Nexperia China and these wafer manufacturers managed to make the relevant 12-inch wafers comply with the IATF 16949 system.
While achieving stable supply of 12-inch wafers, Nexperia China also expanded packaging capacity and optimized processes for related automotive-grade chip products.
The reporter learned that previously, Nexperia China had intended to allocate half the factory space of one domestic plant for producing smartwatch chips. However, after the overseas 6–8 inch wafer supply was cut off, Nexperia China adjusted its business strategy, dedicating all that space to expanding packaging capacity for 12-inch wafer-based automotive-grade chips. Additionally, Nexperia China collaborated with other leading domestic packaging and testing companies to further expand capacity.
Yet, how to get downstream companies to quickly complete consistency verification for the performance of related products became a new obstacle to Nexperia China's capacity recovery.
Li Dongyue told the Economic Observer reporter that whether high-performance automotive-grade chips based on 12-inch wafers could be mass-produced also depends on whether downstream companies dare to be the first to use them and whether leading companies in the downstream industry are willing to accompany you on the journey.
A chip industry insider pointed out that even if some companies are willing to "run alongside," the process from introducing automotive-grade chips to verifying their performance consistency and reliability often takes 6–12 months, which would still significantly affect Nexperia China's mass production and delivery schedule.
In response, Pang Yibing stated that many automotive companies are long-term customers of Nexperia China. Their deep understanding of the performance of Nexperia China's automotive-grade chip products enabled the consistency verification for various automotive-grade chips developed on 12-inch wafers to be completed in a relatively short time.
"We spent eleven months, step by step, to restore mass production of automotive-grade chip products," Li Dongyue said. Currently, Nexperia China's automotive-grade chip product standards have passed AEC-Q101 certification (automotive-grade discrete semiconductor device reliability certification standard), with a failure rate controlled at the level of one in a billion. The yield rate for some mature-process automotive-grade chip products developed on 12-inch wafers has reached 99%, 5–10 percentage points higher than that of 8-inch wafers.
Li Dongyue said that through this capacity recovery, Nexperia China achieved a 100% localization ratio, and products like MOSFETs and logic ICs have established a closed-loop domestic supply chain. This means Nexperia China no longer relies on the fragile model of overseas wafer supply, having completely switched to a self-reliant and controllable domestic industrial chain system.
Price Cuts Against the Trend
With ample and stable 12-inch wafer supply and chip mass-production capability, Nexperia China made a "counter-cyclical" decision—to cut prices—amid a general annual price increase of 15–20% for automotive-grade chips.
On August 22, Nexperia China launched 8 power MOS products, priced approximately 30% lower than last year, 4 general-purpose logic products priced 20% lower, and some bipolar general-purpose devices priced about 10% lower than mainstream market products.
Zhang Qiuming pointed out to the Economic Observer reporter that this is not a discount due to subsidies, but rather the industrial upgrade dividends brought by the 12-inch platform and the closed-loop local supply chain.
"The economies of scale formed by the 12-inch platform and the improved chip yield further dilute manufacturing costs. Localized supply chains have significantly reduced cross-border transportation, warehousing, and other costs. This allows the profits that previously remained within the production chain to start being returned to downstream companies through price reductions," Zhang Qiuming said.
The reporter noted that after the Nexperia system in the Netherlands was disconnected and overseas data platforms became inaccessible, Nexperia China launched its own self-operated e-commerce channel. Downstream companies can directly check inventory, selection, and prices for various automotive-grade chip products through this channel, with shipments possible within 24 hours after ordering.
Yin Jun, E-commerce Director of Nexperia China, told the Economic Observer reporter that in the traditional distribution model, chip manufacturers often found it difficult to understand terminal customers' selection and price feedback, leaving both buyers and sellers in a situation of price opacity. Now, through the self-operated e-commerce channel, both Nexperia China and downstream companies can quickly grasp each other's quotes and chip specification requirements, further improving transaction efficiency.
A procurement manager from a new energy vehicle company told the Economic Observer reporter that the price-cutting strategy is quite attractive to downstream automakers. Especially in the new energy vehicle production process, traction inverters, on-board chargers, battery management systems, and body control all require power semiconductor devices. Reducing the procurement cost of these core components will create more room for pricing optimization in new energy vehicles.
However, this procurement manager is more concerned about the delivery cycle of automotive-grade chip products. Since the beginning of this year, due to the explosive growth of AI (Artificial Intelligence) data centers occupying a large amount of 8-inch wafer capacity, the delivery cycle for automotive-grade power semiconductor devices has generally extended to 20–40 weeks, with some in-short-supply models having delivery cycles as long as a year.
"Due to shortages, we had to adopt a business strategy of full prepayment + premium stockpiling, tying up about 5% of our operating cash flow and affecting capital turnover for other business operations," the procurement manager stated frankly.
Li Dongyue told the reporter that by forming stable and ample 12-inch wafer supply with domestic strategic partners, Nexperia China has now compressed the delivery cycle for mainstream automotive-grade chip products to 4–6 weeks.
The reporter learned that after the Nexperia system in the Netherlands was disconnected, Nexperia China also rebuilt its financial system, fully introducing a Renminbi (RMB) trade settlement system. This means that overseas downstream companies purchasing automotive-grade chip products also need to pay in RMB.
"RMB settlement doesn't trouble us," said a procurement department head for the Asia-Pacific region of an overseas automotive company. They first exchange foreign currency into RMB in Hong Kong, then use cross-border trade RMB settlement payment methods to continue purchasing automotive-grade chip products from Nexperia China.
When asked why overseas automakers haven't changed chip suppliers, the procurement department head stated that automotive companies typically do not change chip suppliers arbitrarily. Once they switch to another manufacturer's automotive-grade chips, it takes at least 1–2 years to verify the chip's safety and reliability, which would significantly impact new vehicle development progress.
Li Dongyue told the reporter that relying on the domestic industrial chain闭环 (闭环 – closed loop) and the 12-inch platform, Nexperia China has the capability to continue serving both domestic and international markets.
"A strong enough Chinese supply chain can serve not only China but also the world," he said.
This article is from the WeChat public account "Economic Observer," author: Chen Zhi
