Chip Supply Crisis: Europe’s Auto Industry at Risk Amid Nexperia Dispute

Europe’s automotive industry is facing another serious threat — this time due to a dispute between the Dutch and Chinese governments over semiconductor company Nexperia. Without a swift resolution, the conflict could trigger major supply chain disruptions and halt vehicle production across Europe.

Background of the Nexperia Dispute

The issue began when the Dutch government took control of Nexperia in late September 2025, citing national security concerns. Nexperia is fully owned by China’s Wingtech Technology.

The move sparked diplomatic tension, as China accused the Netherlands of interfering in corporate affairs. Soon after, China’s Ministry of Commerce imposed export restrictions on certain chip components and sub-assemblies manufactured by Nexperia in China.

Immediate Impact on Europe’s Automotive Sector

The European Automobile Manufacturers’ Association (ACEA) expressed deep concern over potential disruptions in vehicle production. In a statement, ACEA said Nexperia had notified its clients — including major automotive suppliers — that it could no longer guarantee chip deliveries.

Without these essential components, automotive suppliers are unable to build electronic modules and parts required by carmakers, risking production shutdowns within weeks.
Major automakers potentially affected include:

• Volkswagen
• BMW
• Mercedes-Benz
• Bosch and Continental as key suppliers

Simple but Critical Chips

Nexperia’s chips are not high-end semiconductors used in AI or computing, but they are crucial due to their large-scale use in modern vehicles — powering systems such as electronics, safety, and infotainment.

Its main production facility is in Hamburg, Germany, while most assembly and packaging take place in China. This dependency exposes Europe’s automotive supply chain to global geopolitical risks.

Connection to the Global Tech Trade War

This dispute forms part of a broader technology rivalry between the United States and China. The U.S. has pressured allies to limit Chinese access to advanced technologies. Wingtech, Nexperia’s parent company, was added to the U.S. trade blacklist in December 2024.

Under new export control rules, any company 50% or more owned by blacklisted entities faces restrictions on U.S.-made technology — putting Nexperia in a difficult position within an interdependent global supply chain.

Statements from Involved Parties

Nexperia said it is engaging with Chinese authorities to seek an exemption from export restrictions. In an official statement, the company said: “We hope all challenges can be resolved soon in the best interest of all parties.”

Meanwhile, China’s Ministry of Commerce condemned what it called “foreign interference in business affairs” and vowed to take necessary measures to safeguard the legal rights of Chinese enterprises.

European Carmakers’ Response

Several automakers have issued statements addressing the situation:

• Volkswagen and BMW said production has not yet been affected but are closely monitoring the situation.
• Bosch confirmed it is in contact with Nexperia to ensure supply stability.
• Mercedes-Benz and Stellantis are assessing risks and exploring alternatives.

Although immediate effects are limited, analysts warn that if the dispute continues into late 2025, Europe could face a major chip shortage similar to the 2021 global semiconductor crisis.

Long-Term Economic Risks

Economists warn that the Nexperia dispute could deepen uncertainty in Europe’s manufacturing sector. Heavy reliance on Asian chip imports and growing global tech protectionism put European industries at a disadvantage.

Initiatives such as the European Chips Act aim to strengthen domestic production capacity, but tangible results may take years to materialize.

Industry Strategies to Mitigate Risks

Experts suggest several long-term strategies to safeguard Europe’s automotive supply chain:

• Diversify chip sources — partner with suppliers in South Korea, Japan, and the U.S.
• Invest in local manufacturing — establish semiconductor facilities within Europe.
• Increase supply chain transparency — improve coordination between carmakers and suppliers.

These measures could help strengthen the sector’s resilience against future chip crises.

Conclusion

The dispute between the Netherlands and China over Nexperia highlights the fragility of global supply chains. While Nexperia’s chips are not cutting-edge, they are vital to keeping Europe’s auto production running.

If left unresolved, this conflict could trigger a severe disruption in one of Europe’s key industries. Diplomatic engagement and long-term industrial policy will be essential to restoring stability and securing the future of Europe’s automotive manufacturing.