On October 26, Nexperia China halted shipments to its factory in Dongguan, in a move that escalates a high-stakes dispute between the Dutch chipmaker and Beijing that may disrupt car production worldwide and worsen the ongoing shortages of semiconductors.
The suspension came a month after the Dutch government took temporary control of Nexperia in September, citing national security concerns linked to its Chinese ownership.
They argued that the firm posed risks to chip-making independence in Europe, as key technology could be transferred abroad.
Shipment Suspension Deepens Tensions
Nexperia confirmed this week that it had stopped all Nexperia chip supplies to its Dongguan site because of what it described as the local management’s failure to comply with agreed contractual payment terms. Interim chief executive Stefan Tilger wrote to clients that the company hopes to resolve the situation soon and resume operations.
The halt in shipments also comes as global attention is focused on the fragile semiconductor supply chain. Industry observers say that the situation could further strain the Nexperia semiconductor sector, already under pressure from growing global competition and trade barriers.
Beijing lashed back immediately following the Dutch government’s move. China bans exports from Nexperia Chinese factories, effectively blocking cross-border shipments of parts and materials. The retaliatory measures have already prompted warnings from automotive suppliers and policymakers about production slowdowns in Europe.
European Carmakers on High Alert
Major carmakers such as Volkswagen, Nissan, and Honda are bracing for possible production halts. Nissan said its chip inventory may last only until early November, while Honda has suspended operations at one of its Mexican plants. Volkswagen warned that its annual profit targets are now at risk.
It is especially concerning because most of the wafers manufactured by Dutch chipmaker Nexperia in Europe are packed in Asia and shipped to customers across the world. These flows can block car assembly lines in no time, particularly for vital electronic components.
The EU has called for dialogue as soon as possible with a view to stabilizing chip exports to China and restoring supply chain balance.
On the other hand, the crisis has also put Chinese automotive suppliers on high alert: They rely on Nexperia’s inexpensive power management chips, which go into everything from airbags to power steering systems.
Without them, production timelines in China would be delayed too.
Meanwhile, the biggest Chinese automotive suppliers have already begun to scrutinize their contracts and seek out backups from local chipmakers. But according to experts, finding reliable alternatives will take at least several months considering the complexity of testing and certification processes.
EU leaders are intensifying diplomatic efforts in Brussels to de-escalate the Nexperia China deadlock, while Trade Commissioner Maroš Šefčovič said discussions with Beijing continue to ensure the restoration of shipments and protection of European manufacturing interests.
EU officials also stress the need for better readiness.
“Stockpiling and diversification of supply are critical for our collective resilience,” said Tech Commissioner Henna Virkkunen.
She further said the forthcoming Chips Act will aim to reduce reliance on imports and make Europe more competitive in the Nexperia market and avoid semiconductor shortages. With Nexperia China at the center of this growing geopolitical and industrial dispute, it is increasingly important that both sides reach common ground.
For the moment, carmakers and chip makers are holding their breath around the world, hoping this conflict doesn’t push the global technology supply chain into another major crisis.
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