Nijmegen-based chip maker Nexperia has warned customers not to buy components produced at its factory in the southern Chinese province of Guangdong, saying it can no longer guarantee the quality of those chips, the Financieele Dagblad reported on Wednesday.

The move highlights the escalating struggle for control of the company and has prompted new tensions between The Hague and Beijing, the paper said.

Its sources say Nexperia has told clients it no longer has oversight of its Chinese operations. The factory in Guangdong produces the bulk of Nexperia’s chips, which are shipped worldwide.

Dominik Zillner of German intermediary firm Components at Service told the FD Nexperia’s European division had explicitly warned customers not to buy components from its Chinese sites. “The company says it can no longer ensure compliance with quality standards at these production locations,” Zillner is quoted as saying.

China imposed the export ban on 4 October, but chips may still reach Europe through unofficial channels and rumours suggest shipments from Guangdong continue despite the ban, the FD said.

The car industry is one of Nexperia’s biggest customers. Zillner said the market was now “hectic”, with manufacturers stockpiling supplies to cover the shortfall.

The dispute comes three weeks after the Dutch ministry of economic affairs formally took control of Nexperia, citing concerns that the company’s Chinese owner could transfer sensitive technology and knowledge abroad.

Caretaker economic affairs minister Vincent Karremans spoke by phone on Monday with his Chinese counterpart, Wang Wentao, about possible next steps. “We are working towards a solution that serves the interests of Nexperia, the European economy and the Chinese economy,” Karremans said in a short statement.

The Hague is also in ongoing talks with the European Commission, the UK, France and Germany. EU trade commissioner Maros Sefcovic also raised the issue with the Chinese trade minister during a meeting in Brussels this week, the FD reported.

Industry experts warn that Nexperia’s decision to withdraw guarantees from its Chinese-made chips could do lasting damage. “It’s madness for a company to undermine itself like this,” one chip-sector insider told the paper. “Major car manufacturers are already removing Nexperia from their supplier lists.”