Is Nexperia really caught in this bigger US-China tech war?

Nexperia, a Dutch semiconductor company owned by China's Wingtech, has become entangled in the escalating trade tensions between the US and China. But the question remains: is the Dutch government simply following a U.S. ruling (as China claims), or is it acting on its own, taking measures to safeguard the country? After a month of news snippets, IO+m tries to get an overview of what's happening.

After the Dutch government seized control of Nexperia, citing governance issues, China retaliated by restricting exports from the company's factories in China. This has led to production cutbacks and potential disruptions to the global automotive supply chain, as Nexperia is a major supplier of vehicle-chip components. Automakers and suppliers are scrambling to find alternative sources and mitigate the impact, but the geopolitical dispute threatens to further strain the semiconductor shortage that is already affecting the industry.

Dutch intervention and Chinese retaliation

The Dutch government's intervention, invoking the Goods Availability Act on 13 October 2025, aimed to take temporary control of Nexperia, citing concerns about its management under Wingtech chairman Zhang Xuezheng. The Dutch Economic Ministry pointed to 'serious governance shortcomings' that threatened the continuity of crucial technological knowledge within the Netherlands and Europe, potentially endangering economic security. Wingtech, in response, decried the intervention as 'excessive interference driven by geopolitical bias, rather than a fact-based risk assessment'. China's Ministry of Commerce retaliated on 4 October by imposing export restrictions on Nexperia China and its subcontractors, requiring explicit licenses for exporting certain finished components and assemblies. This action and the Dutch intervention have deepened global semiconductor supply tensions, raising concerns about potential disruptions in the automotive industry.

Nexperia's role in the automotive industry

Nexperia produces hundreds of millions of chips annually, essential for various vehicle functions, including switches and steering wheel controls. The company operates manufacturing facilities in Germany, the UK, and the Netherlands, boasting a combined capacity exceeding 50 billion components each year. Nexperia's products are deeply integrated into vehicle systems, making any disruption to its supply chain a potential cause for logistical bottlenecks. The automotive industry's exposure to Nexperia is estimated at approximately 5% of the global automotive silicon discrete market, with a slightly higher share in Europe. This means that while Nexperia is a significant player, the impact is somewhat contained due to the availability of alternative suppliers.

Production cuts and supply chain concerns

Nexperia's main Dongguan assembly plant in China has significantly reduced production, cutting working hours and idling approximately one-third of its machines, according to employees interviewed by the South China Morning Post. This production cut is attributed to a shortage of wafers typically supplied by Nexperia's factories in Germany and the United Kingdom. On 10 October, automakers and their tier-one suppliers were notified by Nexperia that it could no longer guarantee chip deliveries to the automotive supply chain. The European Automobile Manufacturers' Association (ACEA) warned that existing stocks might only last for several weeks. ACEA Director General Sigrid de Vries expressed deep concern about potential disruptions to European vehicle manufacturing if the Nexperia chip supply interruption is not resolved promptly.

Industry response and mitigation efforts

In response to the crisis, tier-one electronics suppliers such as Bosch, Continental, and DENSO are actively assessing their inventories and seeking alternative suppliers to mitigate their exposure to Nexperia-related disruptions. Automakers are collaborating with Nexperia and other suppliers to evaluate potential impacts and develop mitigation measures. Despite the challenges, industry experts suggest that the disruption is limited because Nexperia primarily sells standard parts readily available from other suppliers. These standard silicon discretes are interchangeable across JEDEC- and AEC-Q101-qualified suppliers, enabling tier-one suppliers and OEMs to substitute equivalent devices without major redesigns. This interchangeability provides some flexibility in managing the supply chain disruption caused by the Nexperia situation.

Geopolitical implications

The Nexperia case highlights the growing tensions in the global semiconductor industry, exacerbated by the trade war between the US and China. The US government placed Wingtech on its 'entity list' in December 2024, restricting its access to US technology and designating it as a national security concern. China has also tightened export controls on rare earth elements critical to semiconductor manufacturing, citing national security interests. The China Semiconductor Industry Association has voiced 'serious concern' regarding the Dutch government's actions, describing them as 'selective and discriminatory' against overseas branches of Chinese enterprises and undermining open trade. Dutch Minister of Economic Affairs Vincent Karremans spoke with Chinese Minister of Commerce Wang Wentao on 21 October 2025, in an attempt to find a constructive solution, indicating ongoing efforts to de-escalate the situation.

Wingtech's perspective and business impact

Wingtech, which acquired Nexperia in 2019, has strongly defended its operations, stating that it has strictly abided by the laws and regulations of all jurisdictions where it operates. The company criticized the Dutch government's intervention as being driven by geopolitical bias rather than a fact-based risk assessment. Wingtech's recent financial results indicate a 63% revenue decline, although the semiconductor business maintains healthier gross margins compared to its divested ODM business. Nexperia's semiconductor business now accounts for 25% of the merged company, a decrease from 40% in 2019, reflecting a shift in business focus. The company’s chairman, Zhang Xuezheng, was suspended from Nexperia's boards by an Amsterdam court order earlier this month, further complicating the governance situation.

Potential long-term effects

The Nexperia disruption has raised particular concerns among German OEMs, especially with several major vehicle launches scheduled for late 2025 and early 2026, including BMW's Neue Klasse platform, Mercedes-Benz's next-generation CLA, and Volkswagen's all-electric T-Cross. John Bozzella, CEO of the Alliance for Automotive Innovation, warned that a prolonged interruption in automotive chip shipments could disrupt auto production in the US and other countries, with spillover effects in other industries. While Nexperia has appointed an independent, non-Chinese board member with decisive voting power, signaling a potential capitulation to Western pressure, the situation remains fluid and the long-term impact on the automotive supply chain is uncertain. The industry is closely monitoring developments and adapting strategies to navigate this complex geopolitical and economic challenge.

In the meantime, Nexperia and all its clients remain caught in this geopolitical battle, regardless of the conflict's origin.