A critical shortage of automotive semiconductors is poised to disrupt vehicle assembly lines worldwide, following a sharp deterioration in relations between China and the Netherlands. The conflict centers on Nexperia, a major European chipmaker, and threatens to idle factories within days.
The crisis began when the Dutch government assumed control of Nexperia in late September, citing national security concerns related to its Chinese parent company, Wingtech Technology. In retaliation, Chinese authorities halted all exports of finished chips from Nexperia’s packaging facilities in China. These components are essential for modern vehicles, controlling systems from engine management to safety features.
Major automotive groups, including Volkswagen, Honda, and Nissan, have issued warnings that their production schedules are now in jeopardy. Industry representatives in Europe have stated that some assembly lines are merely “days away” from a standstill due to the lack of parts.
Despite efforts by European suppliers to secure exemptions from the Chinese export ban, negotiations have stalled. Beijing has publicly accused the Netherlands of obstructing a resolution, calling on Dutch officials to cease interference and engage constructively. A statement from China’s commerce ministry warned that the Dutch position “will inevitably deepen the adverse impact on the global semiconductor supply chain.”
This development casts doubt on recent optimistic signals from other Western capitals suggesting a near-term agreement was within reach. The dispute intensified last week when Nexperia informed its customers that all shipments from its Chinese operations had been suspended. Notably, while the chips are fabricated in Europe, approximately 70% are packaged and tested in China before global distribution.
The Dutch seizure of Nexperia utilized a legal instrument from the Cold War era, partly driven by alleged U.S. concerns about the potential transfer of sensitive intellectual property. A Dutch government spokesperson stated that discussions with Chinese authorities are ongoing, with the aim of finding a solution beneficial for both Nexperia and the involved economies.
This semiconductor crisis compounds existing challenges for the global auto industry, which is still recovering from recent shocks, including a major cyber-attack that halted production at Jaguar Land Rover’s UK plants for several weeks. The sector now faces a new and immediate test, with the flow of vital components caught in a geopolitical standoff.