A crisis at chipmaker Nexperia sent automakers scrambling. Here’s what to know

A battle for control of a little-known chipmaker has threatened global auto production by choking the semiconductor supply chain, although there are signs the crisis is close to being resolved.

The power struggle around Nexperia, a Chinese-owned Dutch semiconductor maker, highlights how vulnerabilities in the technology supply chain are weighing on automakers, including forcing Honda to halt production at a Mexican factory making its popular HR-V crossover for North American markets. It also shows how Europe is caught in the middle of a broader geopolitical confrontation between Washington and Beijing.

Here is an overview of the dispute:

The turmoil came to light in mid-October, when the Dutch government announced that it had invoked a rarely used World War II-era law to take effective control of Nexperia a few weeks earlier.

The Dutch Ministry of Economic Affairs said it took the measure for reasons of national security. Officials said they intervened because of “serious governance deficiencies” at Nexperia, asserting their control to prevent the loss of crucial technological know-how that could threaten Europe’s economic security.

Nexperia’s Chinese owner, Wingtech Technology, a partially state-owned company, is at the heart of the conflict. Amid the board battle, a Dutch court granted the ministry’s request to oust Nexperia’s Chinese CEO Zhang Xuezheng. U.S. officials told the Dutch government it should be replaced to avoid trade restrictions, according to a court filing.

Nexperia makes simple semiconductors such as switches and logic chips. The automotive industry – one of Nexperia’s largest markets – uses its chips for many functions, such as adaptive LED headlight controllers, electric vehicle battery management systems and anti-lock brakes.

Headquartered in the Dutch city of Nijmegen, Nexperia was spun off from Philips Semiconductors twenty years ago. It was eventually purchased by Chinese company Wingtech Technology in 2018 for $3.6 billion.

Nexperia has wafer manufacturing plants in Britain and Germany. It operates an assembly and testing center in China’s southern manufacturing heartland of Guangdong, which accounts for approximately 70% of its final product production capacity, as well as similar centers in the Philippines and Malaysia.

The dispute is part of a broader struggle between the United States and China for technological supremacy, which has left Europe caught in the middle.

This stems from Washington’s decision late last year to place Wingtech on its “entity list”, which subjects companies to export controls due to national security risks. In late September, the United States extended this list to Wingtech subsidiaries, including Nexperia, putting pressure on its allies to follow suit.

After the Dutch government asserted control over Nexperia, Beijing responded shortly thereafter by blocking the export of Nexperia chips from its assembly plant in the Chinese city of Dongguan. He accused the Netherlands of “unrest and chaos” in the chip supply chain.

Signs of hope emerged following last month’s high-profile meeting between U.S. President Donald Trump and Chinese leader Xi Jinping, when the White House said Beijing would ease the export ban as part of a U.S.-China trade truce.

Although Beijing also confirmed that exports would be allowed to resume, Nexperia’s Chinese subsidiary said the headquarters had suspended shipments of wafers used to make chips to its Chinese factory, which could harm its ability to deliver finished products.

Nexperia’s headquarters responded in a statement Wednesday, saying the Chinese unit had refused to pay for the wafers and accusing it of “ignoring legal instructions” from its global management team. The company said it could not guarantee the quality of chips delivered from its Chinese factory since October 13.

Modern automobiles rely on so-called discrete chips made by companies like Nexperia, which, unlike more advanced microprocessors, perform a single function. Executives from major automakers expressed concerns during the latest round of earnings calls, saying it would be difficult to find a large-scale replacement for Nexperia in the near term.

“While Nexperia represents only about 5% of the automotive discrete chip market in terms of revenue, its share is much higher in terms of discrete chip volume,” S said.&Analysts at P Global Mobility wrote in a recent note.

Nexperia parts are widely used in vehicle systems – often dozens or even hundreds per vehicle – and automakers in North America, Japan and South Korea are at risk, they added.

“This is an industry-wide problem. Rapid progress is really needed to avoid fourth-quarter production losses for the entire industry,” said Ford CEO Jim Farley.

Mary Barra, CEO of General Motors, warned that production could be affected. The company has “teams working around the clock with our supply chain partners to minimize potential disruptions,” she said.

Nissan CEO Ivan Espinosa told CNBC that the company was planning a 25 billion yen ($163 million) provision for supply risks, in part to “absorb” the impact of the Nexperia crisis on production.

Mercedes-Benz is “scouring the world for alternatives,” CEO Ola Kallenius said. The Association of European Automobile Manufacturers said its members, including BMW, Renault, Volkswagen and Volvo, had been forced to use up their chip reserves and warned of halting assembly lines if they ran out.

European Union Trade Commissioner Maros Sefcovic noted “encouraging progress” on Saturday, writing on

In Beijing, the Commerce Ministry also said on Saturday that it had accepted a Dutch request to send representatives to China for “consultations”.

But he noted that the Netherlands had yet to take concrete steps to restore the global semiconductor supply chain, with the Dutch government saying days earlier that it would take “appropriate measures on our part if necessary.”

Economy Minister Vincent Karremans said in the statement that “the Netherlands is confident that the supply of chips from China to Europe and the rest of the world will reach Nexperia’s customers in the coming days.”

Honda has learned that Nexperia shipments from China have resumed, Executive Vice President Noriya Kaihara told reporters Friday. It said the Japanese automaker plans to resume production during the week of Nov. 21 at its factory in Celaya, Mexico, which can make up to 200,000 vehicles per year.

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Yuri Kageyama, an AP Business editor in Tokyo, contributed to this report.