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Chinese-owned chipmaker Nexperia invests a big $200 million in expanding its European operations

ByYasmeeta Oon

Jun 28, 2024

Chinese-owned chipmaker Nexperia invests a big $200 million in expanding its European operations

AMSTERDAM/HAMBURG – Nexperia, a global leader in the production of basic semiconductors such as diodes and transistors, announced on Thursday that it will invest $200 million to expand capacity at its primary production site in Hamburg, Germany. This significant investment by the Dutch-headquartered Nexperia, owned by Chinese electronics giant WingTech, is noteworthy as it represents a rare example of a computer chip investment in Europe that does not rely on state subsidies provided under the EU’s Chips Act launched in 2023.

The European Union is currently examining whether China is unfairly subsidizing domestic production of simple “legacy” chips, which are integral to various industries including automotive, electronic systems, smartphones, and industrial applications. Despite the scrutiny, Nexperia, with all its manufacturing and intellectual property based in Europe, remains committed to its expansion plans.

“Electric cars, green energy, and digitalization are inconceivable without our products,” stated CFO Stefan Tilger in a press release announcing the investment. “They are the nuts and bolts that make new technologies possible.”

Nexperia, which produces 100 billion such chips annually, accounts for nearly a quarter of the global supply, with assembly and packaging operations in China, Malaysia, and the Philippines. The Netherlands-based company competes with major players such as Texas Instruments, Infineon, and NXP in the automotive market, with approximately 10% of its sales going to Chinese customers.

“We have a very ambitious, steep growth curve ahead of us,” said Nexperia’s advocacy chief Hannes van Raemdonck. “The company is investing now to benefit from trends like electrification and the increasing number of semiconductors used in cars. Everything will simply require more chips to power things, and that’s our core business: power semiconductors.”

Since its $3.6 billion acquisition by WingTech in 2018, Nexperia has faced growing scrutiny from European governments. In 2022, the British government forced the company to divest a factory in Newport, citing security concerns. Additionally, in 2023, the German government disqualified Nexperia from receiving a subsidy intended for the development of battery efficiency technology. Despite these challenges, the Dutch government approved Nexperia’s purchase of Nowi, a startup, after retroactive vetting.

Van Raemdonck highlighted that Nexperia competes with Chinese firms and supports European policies aimed at ensuring competitiveness. However, he expressed skepticism regarding concerns about Chinese companies creating overcapacity. “I don’t think it’s correct to speak of flooding the market,” he said. “I can’t speak for China, obviously, but I think most of the Chinese ramping-up is happening to meet domestic demand.”

Nexperia plans to add production lines in Hamburg for two types of “wide bandgap” chips, which are used in electrical infrastructure. These chips, made from Silicon Carbide (SiC) and Gallium Nitride (GaN), are preferred over traditional silicon chips due to their efficiency, speed, lightweight, and ability to function under high temperatures and voltages.

  • Investment Amount: $200 million
  • Location: Hamburg, Germany
  • Focus: Expansion of semiconductor production capacity
  • Types of Chips: Silicon Carbide (SiC) and Gallium Nitride (GaN)
  • Market Impact: Nearly 25% of the global supply of basic semiconductors

Wide bandgap semiconductors such as SiC and GaN offer significant advantages over traditional silicon-based semiconductors. These include higher efficiency, faster operation, lighter weight, and superior performance in high-temperature and high-voltage environments. These characteristics make wide bandgap semiconductors ideal for applications in electric vehicles, renewable energy systems, and advanced digital infrastructure.

  • Higher Efficiency: Reduced energy loss during operation.
  • Faster Operation: Enhanced performance speed.
  • Lightweight: Reduced weight for applications.
  • High-Temperature Tolerance: Superior functioning under extreme conditions.
  • High Voltage Capability: Better performance at high voltages.
Comparison of Wide Bandgap Semiconductors and Traditional Silicon Chips
FeatureWide Bandgap Semiconductors (SiC, GaN)Traditional Silicon Chips
Operation SpeedFasterSlower
Temperature ToleranceHighModerate
Voltage CapabilityHighModerate

Nexperia’s investment not only underscores its commitment to innovation and growth but also positions the company strategically within the global semiconductor market. By expanding its capacity in Europe, Nexperia can better serve the growing demand for advanced semiconductors in key industries, including automotive, renewable energy, and digital technologies. This move also highlights the company’s resilience and adaptability in navigating regulatory challenges and market dynamics.

In summary, Nexperia’s $200 million investment in expanding its Hamburg production facility represents a significant step forward in the semiconductor industry. By focusing on the development and production of wide bandgap semiconductors, the company is poised to meet the increasing demand for efficient, high-performance chips essential for future technologies. This strategic expansion not only enhances Nexperia’s competitive edge but also reinforces Europe’s position in the global semiconductor landscape.

Featured Image courtesy of The Cyber Express

Yasmeeta Oon

Just a girl trying to break into the world of journalism, constantly on the hunt for the next big story to share.

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