Nexperia Semiconductor (China) Ltd said on Sunday that its Dutch company has unilaterally decided to stop supplying wafers to its packaging and testing facility in Dongguan, Guangdong province from Oct 26, a move the Chinese firm called "groundless and malicious".

In a letter to customers, Nexperia China claimed the decision was a "direct consequence of the local management's recent failure to comply with agreed contractual payment terms".

Nexperia China strongly rejected the allegation, saying it was "completely fabricated and a deliberate attempt to discredit" the Chinese management.

"There has been no breach of contract on our side," the company said in its statement.

On the contrary, Nexperia's Dutch company currently owes the Dongguan facility payments totaling about 1 billion yuan ($140 million), the company added.

The Chinese firm said it has built sufficient inventories of finished and in-process products to ensure "stable and continuous supply" for customers through the end of the year and beyond.

To safeguard long-term supply chain resilience, Nexperia China has launched contingency plans and is accelerating the qualification of new wafer capacity.

"We are fully confident in completing the validation in the short term and seamlessly meeting all customer demands from next year onward," the company said.

Nexperia, which was acquired by China's Wingtech Technology in 2019, produces semiconductors used in automotive, mobile and industrial applications.