Geopolitical Tensions: Dutch and China on Chipmaker Nexperia

Netherlands Takes over Nexperia from Chinese Firm

The Netherlands seized control of Chinese-owned chipmaker Nexperia over governance concerns, prompting China to restrict exports of certain components from Nexperia’s China operations. The move has disrupted automotive supply chains, with major carmakers and industry groups warning of potential production delays or stoppages as Nexperia supplies widely used automotive semiconductors. Governments and industry associations in Europe, Japan and the U.S. are scrambling for short-term solutions while diplomatic talks continue.

It should be noted that the Chinese company Wingtech that had purchased Nexperia has close ties to the Chinese military. The US recently placed Wingtech on its blacklist. Chinese media and some western media reports, have pushed the narrative that the US pushed the Dutch into taking this action.

However, the situation is more complicated than this simple narrative with real security concerns prompting the move. Thus, the Netherlands has, for the first time, used a 1952 Cold War–era law (the Goods Availability Act) to take control of Nexperia, the European subsidiary of China’s Wingtech, citing governance failings and risks to national and European economic security. China and industry bodies condemned the move as politically biased and discriminatory. The decision highlights intensifying geopolitical competition over semiconductors — with concerns about technology leakage, military end‑uses (some Nexperia chips were reportedly found in Russian weapons), export controls, and broader US–China trade tensions

Key points

• Dutch government invoked its Goods Availability Act to intervene at Nexperia, citing “serious governance shortcomings” after the company’s 2019 acquisition by Wingtech.
• China retaliated by blocking some exports from Nexperia’s China arm, which Nexperia says affects shipment of finished components and sub-assemblies.
• Automotive industry warnings: GM, German VDA, ACEA and multiple carmakers and suppliers say Nexperia chips are critical and existing stocks may last only weeks; sourcing replacements could take months.
• Background tensions: Wingtech was added to a U.S. Commerce Department Entity List in 2024 over security concerns; Wingtech’s leadership changes and investor worries have intensified the dispute.
• Diplomacy: Commerce ministers of the Netherlands and China spoke but reached no material agreement; both sides said they will continue talks to find a constructive solution.

Chinese Reaction and Nexperia’s Chinese Unit Operating Independently

Nexperia’s Chinese unit has resumed supplying semiconductors to local distributors after a temporary halt triggered by a dispute and Beijing’s export ban, but resumed sales are limited to domestic transactions settled in Chinese yuan. The unit is operating independently of the Dutch parent after the Dutch government seized control; Nexperia is seeking alternative packaging partners outside China and has warned customers about potential quality risks from products sourced from the Chinese subsidiary. The dispute has raised concerns about broader auto-industry chip supply disruptions.

Key points

• Chinese unit resumed domestic shipments but requires payments in yuan; previously transactions used foreign currencies (e.g., U.S. dollars).
• The unit is positioning itself to operate independently of Dutch parent after Dutch government seized control and removed the Chinese CEO.
• Nexperia is looking for alternative packaging capacity outside China as the dispute shows little sign of quick resolution.
• The Chinese unit said manufacturing continues orderly and accused the Dutch parent of casting “groundless doubt”; it may pursue legal action.
• The situation prompted industry warnings about potential chip shortages for automakers and government-level attention in Europe and Japan.

Implications and outlook

• Supply-chain fragmentation: The split between Nexperia’s Dutch parent and its Chinese unit highlights growing geopolitical fragmentation in the semiconductor supply chain. Companies may increasingly regionalize production and sourcing to reduce regulatory and political risk, potentially raising costs and reducing efficiency.
• Currency and payment risk: The yuan-only settlement requirement could complicate procurement for international buyers and add foreign-exchange exposure. Some customers may be forced to find alternate suppliers or set up local currency arrangements, which could delay purchases and production schedules.
• Automotive sector vulnerability: Automakers—already strained by tight component inventories—face additional uncertainty. If the Chinese unit is constrained in supplying overseas customers or if external packaging partners are not secured quickly, certain legacy or commodity parts could become harder to source, increasing the risk of production slowdowns or line stoppages.
• Regulatory ripple effects: Authorities in Europe and elsewhere will likely scrutinize cross-border ownership and control of critical suppliers more closely. The episode may prompt tighter screening of foreign acquisitions and more robust contingency planning requirements for critical suppliers.
• Quality and warranty concerns: Nexperia’s warning about potential quality issues from parts sourced by the Chinese unit raises buyer concerns about traceability, warranty coverage and long-term reliability. OEMs may escalate testing and validation requirements or shift orders to suppliers with clearer governance structures.
• Legal and diplomatic escalation: With public accusations and hints at legal action, the dispute could become protracted and involve regulators and courts in multiple jurisdictions. Diplomatic channels may be used to defuse tensions given the strategic importance of semiconductors.

What to watch next

• Whether Nexperia secures alternative packaging partners outside China and how quickly those partners can scale.
• Any changes to the Chinese unit’s export policies beyond the current domestic-only, yuan-denominated sales.
• Statements or interventions from European, U.K., Japanese and Chinese regulators or government officials.
• Customer responses from major automakers and electronics firms—whether they reroute orders, increase inventories, or seek alternative suppliers.
• Legal filings or arbitration notices from either side that could reveal more details about the underlying dispute and contractual arrangements.

Bottom line

The incident underscores how geopolitical tensions and national security measures can quickly complicate global supply chains for critical technologies. Even as the Chinese unit continues domestic operations, the broader uncertainty is likely to push buyers to diversify suppliers, accelerate localization of key manufacturing steps and heighten vigilance around cross-border corporate governance and product traceability.