Reuters: Nexperia slashes wafer supply amid escalating tech war

According to a letter addressed to its customers that was reviewed by Reuters, Dutch chipmaker Nexperia has suspended wafer shipments to its Chinese assembly plant. The move potentially exacerbates a global semiconductor shortage that is worrying automakers worldwide. This drastic move follows a contractual dispute between Nexperia and its Chinese unit, with the Dutch government recently seizing control of the company from its Chinese owner over intellectual property concerns. The supply disruption threatens to disrupt car production across Europe, as Nexperia's basic power chips are crucial components used throughout the automotive industry.

Nexperia's decision to halt wafer supplies to its Dongguan plant in China stems from the local management's failure to adhere to agreed contractual payment terms. This internal dispute has broader implications, given the backdrop of increasing tensions between the Dutch government and Nexperia's former Chinese owner, Wingtech Technology. The Dutch government's seizure of Nexperia on September 30, 2025, and the subsequent removal of its Chinese CEO, have intensified the conflict. Interim CEO Stefan Tilger stated in a letter to customers that continuing the current supply flow from Nexperia's front-end sites was no longer justifiable, even though shipments had been maintained for as long as commercially feasible. Nexperia has also clarified that it operates independently of Wingtech financially and does not rely on Wingtech for capital. This separation underscores the company's efforts to manage the situation autonomously while seeking a resolution to the ongoing issues.

Automotive industry braces for impact

The automotive industry, heavily reliant on Nexperia's chips, is bracing for potential disruptions. Nexperia supplies approximately 60 percent of its chips to the automotive sector, where they are essential for functions such as lighting and electric control units. Industry bodies have voiced concerns about the possible impact on production. Stellantis, for example, has established a 'war room' to closely monitor the situation and mitigate any potential chip shortages. Similarly, Nissan indicated it had enough chips to sustain production only until the first week of November. The reliance on Nexperia's components is so pronounced that finding alternative suppliers is a complex, time-consuming process, often requiring months of qualification. This delay could exacerbate the existing supply chain vulnerabilities and lead to production slowdowns or stoppages across the automotive industry.

Ripple effects across the supply chain

The tensions surrounding Nexperia are creating ripple effects throughout the global supply chain. Some of Nexperia's products, which previously cost only a few Chinese cents, have seen their prices surge more than tenfold in recent weeks, reaching two to three yuan each. This price inflation reflects the scarcity and heightened demand for these critical components. The situation has become so critical that German auto parts supplier Bosch is reportedly preparing to furlough staff at its Salzgitter plant if the dispute is not resolved promptly. Major automotive manufacturers like Nissan, Mercedes-Benz, and GM have also expressed alarm about the deepening supply crunch. Honda has already suspended production at a plant in Mexico and adjusted production in the United States and Canada, illustrating the immediate impact of the chip shortage on manufacturing operations.