European auto industry faces risk of chip shortage from Nexperia
A geopolitical dispute involving supplier Nexperia is threatening to severely disrupt supply chains, causing concern for major automakers such as Volkswagen and BMW.
The European car industry is once again facing a serious semiconductor shortage, after the European Automobile Manufacturers Association (ACEA) warned of potential production disruptions stemming from a complex dispute between the Dutch and Chinese governments over Nexperia, a key chip supplier to the industry.
The issue has come as a fresh blow to manufacturers already facing pressure from tariffs, fierce competition and slowing demand for electric vehicles. ACEA expressed deep concern that if supplies from Nexperia are not stabilized soon, car production across the continent could be severely affected.
Origin of geopolitical disputes
Tensions flared after the Dutch government announced its takeover of Nexperia on September 30. Although headquartered in Nijmegen (Netherlands), Nexperia is 100% owned by Wingtech, a Chinese technology company partly invested by the Chinese government. The Dutch move is said to stem from concerns about the transfer of sensitive technology to China, especially in the context of Washington increasing pressure on Wingtech.
The US had previously added Wingtech to its trade-restricted entity list in late December 2024. In response, China’s Ministry of Commerce issued an export control order on October 4, banning Nexperia China and its subcontractors from exporting certain components and semi-finished products. The situation became more complicated when Nexperia China asked its employees to ignore instructions from its headquarters in the Netherlands, insisting that the mainland Chinese entity was the one paying their salaries.
Supply chains under threat
The Chinese embargo directly affects Nexperia’s global supply chain. Although it has its main manufacturing plant in Hamburg, Germany, the majority of the company’s chip packaging and assembly is done in China. Without these steps, finished products cannot reach component manufacturers.
“Without these chips, suppliers cannot produce the components and spare parts needed to supply assembly plants, threatening to bring production lines to a halt,” ACEA stressed. Major carmakers such as Volkswagen, BMW and leading parts supplier Bosch have all confirmed that Nexperia is part of their networks.
Reaction from auto industry giants
Major automakers are closely monitoring the situation. Volkswagen, BMW and Bosch said they have not seen any immediate impact on production but are actively assessing potential risks. Stellantis confirmed it is working closely with Nexperia and other partners to find solutions to mitigate the impact.
Meanwhile, Mercedes-Benz said it was coordinating with relevant parties but declined to comment on whether Nexperia was on its supplier list.
A spokesperson for Nexperia said the company is working with Chinese authorities to seek exemptions from the restrictions to minimize the impact on key partners. The company expressed hope that the challenges will be resolved soon for the mutual benefit of all parties.
The crisis has once again highlighted the fragility of the global automotive supply chain and the increasingly important role that geopolitics plays in the industry. If not addressed promptly, the European automotive sector could face a new round of disruption, compounding existing challenges.
