Internal Nexperia Feud Worsens Global Chip Crisis for Carmakers
European automobile manufacturers are confronting what industry officials describe as a devastating semiconductor shortage, despite China having recently lifted export restrictions on Nexperia chips. This critical situation threatens to bring global production lines to a standstill within weeks, creating unprecedented challenges for the automotive sector.
The crisis has deepened due to an internal corporate dispute where Nexperia's Dutch operations have halted shipments of essential silicon wafers to its Chinese subsidiary for assembly. This internal conflict within the chipmaker is creating severe bottlenecks for basic, low-margin chips that are absolutely vital for numerous car components including airbag systems, lighting controls, and window mechanisms.
Supply Chain Breakdown and Manufacturing Impact
Nexperia's complex supply chain typically involves manufacturing silicon wafers in facilities located across the United Kingdom, Netherlands, and Germany, before shipping them to China for final assembly and subsequent re-export to global markets. According to a detailed Financial Times report, while some chip shipments have resumed following Beijing's decision to ease initial export controls, the ongoing refusal by Nexperia's Dutch division to supply its Chinese partner continues to keep the entire automotive industry in a precarious position.
An executive from a major carmaker, who chose to remain anonymous, revealed the severity of the situation to FT: "Our plea is that Nexperia China and Nexperia EU come together and actually start to resume normal operations because what's happening is just inexplicable and it is devastating for hundreds of industries." The executive emphasized that while the Chinese facility maintains some wafer inventory, this stockpile will inevitably deplete without renewed supplies from European manufacturing sites.
"We have probably got a few weeks' supply, but we need this to get resolved quickly," the concerned executive added, noting that their teams are working continuously to identify alternative sources, though success remains uncertain given the specialized nature of these components.
Industry Response and Production Timelines
Current estimates suggest that supplies at Nexperia's Chinese facility might last until early to mid-December, though this projection remains fluid as the Chinese subsidiary actively explores alternative wafer sources. To mitigate broader supply chain disruptions, the facility might be forced to deliberately slow down production rates, further complicating the global automotive manufacturing landscape.
ACEА, the influential European Automobile Manufacturers' Association, acknowledged the positive development of China lifting export controls but cautioned that significant challenges remain. "We welcome the Chinese announcement lifting export controls. But we will not have enough chips to meet global demand as long as there are restrictions on the export of wafers to China," the association stated, emphasizing that while progress is being made, the fundamental supply issue remains unresolved.
German automotive giant Volkswagen characterized the situation as "dynamic and uncertain." While confirming that production at Volkswagen brand vehicle manufacturing plants in Germany has remained unaffected so far, the company explicitly stated that future production disruptions cannot be ruled out given the volatile nature of the semiconductor supply chain.
Root Causes: Governance Dispute and Control Struggle
The current crisis originated from a power struggle for control of Nexperia's Chinese operations. In October, the Dutch government took the dramatic step of seizing control of Nexperia and removing Chinese chief executive Zhang Xuezheng, who also serves as the primary shareholder of Nexperia's parent company Wingtech. Dutch authorities justified this intervention by citing "serious governance shortcomings" within the organization.
Nexperia Netherlands subsequently announced the suspension of direct wafer supplies to its Chinese facility, providing specific reasons including refusal to make required payments, creation of unauthorized bank accounts for customer payments, and distribution of unauthorized letters containing false information to customers, subcontractors, third-party suppliers, and employees.
The Dutch Ministry of Economic Affairs clarified that "There have not been any export controls imposed by the Netherlands or Brussels at Nexperia or other companies regarding this matter now or in the past," indicating that the current supply disruption stems entirely from internal corporate governance issues rather than governmental trade restrictions.
As the global automotive industry holds its breath, the resolution of this internal corporate dispute at Nexperia will determine whether production lines continue operating or face potentially catastrophic shutdowns in the coming weeks.
