Dutch Government Seizes Control of Chipmaker Amid Security Concerns
A dramatic power struggle over Nexperia, a Chinese-owned Dutch semiconductor manufacturer, has sent shockwaves through the global automotive industry, forcing major carmakers to halt production lines and scramble for solutions. The crisis highlights the fragile nature of technology supply chains and Europe's precarious position in the ongoing geopolitical standoff between Washington and Beijing.
The turmoil erupted publicly in mid-October when the Dutch government revealed it had invoked a rarely used World War II-era law to take effective control of Nexperia weeks earlier. Officials from the Dutch ministry of economic affairs cited national security concerns and "serious governance shortcomings" as justification for their intervention, aiming to prevent the loss of crucial technological expertise that could threaten Europe's economic security.
Geopolitical Battle Disrupts Critical Supply Chain
At the heart of the dispute lies Nexperia's Chinese owner, Wingtech Technology, a partially state-owned company. Amid the boardroom battle, a Dutch court granted the ministry's request to remove Nexperia's Chinese CEO Zhang Xuezheng after American officials warned the Dutch government that his replacement was necessary to avoid trade restrictions.
The conflict represents a microcosm of the broader technological supremacy struggle between the U.S. and China. The situation escalated when Washington placed Wingtech on its "entity list" late last year, subjecting the company to export controls due to national security risks. By late September, the U.S. had expanded these restrictions to include Wingtech's subsidiaries, including Nexperia, putting pressure on allies to follow suit.
Beijing retaliated swiftly after the Dutch government asserted control over Nexperia, blocking the export of Nexperia chips from its assembly plant in Dongguan, China. Chinese authorities blamed the Netherlands for creating "turmoil and chaos" in the chip supply chain.
Automotive Industry Faces Widespread Production Disruption
The impact on the automotive sector has been immediate and severe. Modern vehicles rely heavily on the simple semiconductors produced by Nexperia—components that perform single functions unlike more advanced microprocessors. These chips are essential for numerous vehicle systems including adaptive LED headlight controllers, electric vehicle battery management systems, and anti-lock brakes.
Honda was forced to halt production at its Mexican factory manufacturing the popular HR-V crossover for North American markets. The Japanese automaker has now received word that Nexperia's shipments from China have resumed and expects to restart production during the week of November 21 at its Celaya plant, which has an annual capacity of 200,000 vehicles.
Industry leaders expressed grave concerns during recent earnings calls. Ford CEO Jim Farley described the situation as "an industrywide issue" requiring a "quick breakthrough to avoid fourth quarter production losses for the entire industry." General Motors CEO Mary Barra warned that production could be impacted, though teams are "working around the clock with our supply chain partners to minimize possible disruptions."
Other manufacturers are feeling the pinch. Nissan CEO Ivan Espinosa revealed the company is setting aside a 25 billion yen (£163 million) provision for supply risks, partly to "absorb" the impact from the Nexperia crisis. Mercedes-Benz CEO Ola Kallenius admitted the company is "scurrying around the world to look for alternatives."
The European Automobile Manufacturers' Association reported that members including BMW, Renault, Volkswagen and Volvo have been forced to dip into their reserve chip stockpiles, warning of potential assembly line stoppages if supplies run out.
Path Toward Resolution Emerges
Recent developments suggest the crisis may be easing. Following last month's high-profile meeting between U.S. President Donald Trump and Chinese leader Xi Jinping, the White House announced Beijing would ease the export ban as part of a U.S.-China trade truce.
European Union trade commissioner Maros Sefcovic noted "encouraging progress" on Saturday, writing on X that China's Commerce Ministry had confirmed "further simplification" of export procedures for Nexperia chips to EU and global customers. The Commerce Ministry in Beijing also agreed to a Dutch request to send representatives to China for "consultations."
Dutch Economics Affairs Minister Vincent Karremans expressed confidence that "the supply of chips from China to Europe and the rest of the world will reach Nexperia's customers over the coming days."
However, complications remain. Nexperia's head office recently stated that its Chinese unit refused to pay for wafers and accused it of "ignoring the lawful instructions" from global management. The company says it cannot guarantee the quality of any chips delivered from its China plant since October 13.
According to S&P Global Mobility analysts, while Nexperia represents only about 5% of the automotive silicon discrete market by revenue, its share is significantly higher in terms of discrete chip volume. The company's parts are widely used across vehicle systems—often dozens to hundreds per vehicle—putting carmakers in North America, Japan and South Korea at particular risk.
Headquartered in the Dutch city of Nijmegen, Nexperia was originally spun off from Philips Semiconductors two decades ago before being purchased by China's Wingtech Technology in 2018 for $3.6 billion. The company operates wafer fabrication plants in Britain and Germany, with an assembly and testing center in China's Guangdong province that accounts for approximately 70% of its end-product capacity, plus similar facilities in the Philippines and Malaysia.
