World

How the Nexperia Chip Dispute Threatens to Halt European Car Production

Dutch government’s Nexperia control threatens car production. China‘s chip export ban sparks supply risks for European automakers.

byAndres Castro

October 16, 2025, 1:09 PM

A close-up view of the Nexperia semiconductor company logo displayed on a smartphone screen. By jackpress / Shutterstock.com.

Executive Summary

European car manufacturers and suppliers face potential significant production disruptions due to a trade and intellectual property dispute involving Chinese-owned chipmaker Nexperia and the Dutch government.

The dispute escalated after the Dutch government took control of Nexperia, citing concerns over technology transfer to its Chinese parent, Wingtech (which is on a U.S. entity list), leading China to impose export controls on Nexperia’s components.

Nexperia chips are essential for the automotive industry, and major automakers like Volkswagen, BMW, Mercedes-Benz, and Stellantis are monitoring the situation, highlighting ongoing trade tensions, including pressure from President Donald Trump’s administration on technology sectors.

The Story So Far

The current trade and intellectual property dispute stems from the U.S. placing Nexperia’s Chinese parent company, Wingtech, on its entity list, leading the Dutch government to seize control of Nexperia over technology transfer concerns. This move prompted China’s commerce ministry to issue retaliatory export controls on Nexperia’s Chinese operations, directly threatening the European automotive supply chain and highlighting ongoing global trade tensions, particularly under President Donald Trump’s administration.

Why This Matters

The escalating trade and intellectual property dispute involving Chinese-owned chipmaker Nexperia, driven by U.S. pressure and leading to Chinese export controls, threatens significant production stoppages for major European car manufacturers like Volkswagen and BMW, who are highly dependent on Nexperia’s essential chips. This conflict not only exacerbates existing challenges for the European automotive sector but also highlights the increasing vulnerability of global supply chains to geopolitical tensions, particularly as President Donald Trump’s administration continues to exert pressure on technology sectors.

Who Thinks What?

The European automotive association (ACEA), along with carmakers like Volkswagen, BMW, Mercedes-Benz, and Stellantis, is deeply concerned about potential production stoppages due to Nexperia’s inability to guarantee chip deliveries, actively assessing risks and seeking mitigation.

The Dutch government took control of Nexperia due to concerns over technology transfer to its Chinese parent company, Wingtech, a move reportedly influenced by increasing pressure from the United States, which had added Wingtech to its entity list.

China’s commerce ministry opposes interference in enterprises’ internal affairs through administrative means and has issued an export control notice prohibiting Nexperia China and its subcontractors from exporting specific components, vowing to safeguard the lawful rights and interests of Chinese enterprises.

European car manufacturers face potential significant production disruptions unless a swift resolution is found for a trade and intellectual property dispute involving Chinese-owned chipmaker Nexperia and the Dutch government. The European Union’s automotive association, ACEA, warned on Thursday of the deep concern among carmakers and suppliers, who received notice from Nexperia last week regarding its inability to guarantee chip deliveries, potentially threatening production stoppages.

Background to the Dispute

The dispute escalated when the Dutch government announced on Sunday that it had taken control of Nexperia as of September 30. This action was reportedly driven by concerns over the potential transfer of technology to Nexperia’s Chinese parent company, Wingtech. Court documents indicate this move followed months of increasing pressure from the United States.

Wingtech, which holds 100% ownership of Nexperia, was added to the U.S. entity list in late December. This designation put Nexperia at risk of being affected by a new U.S. rule extending export control restrictions to companies with at least 50% ownership by an entity on the U.S. list.

In response, China’s commerce ministry issued an export control notice on October 4, prohibiting Nexperia China and its subcontractors from exporting specific finished components and sub-assemblies manufactured in China. Nexperia’s largest manufacturing site is in Hamburg, Germany, but a majority of its chips undergo packaging and assembly in China.

Impact on Automotive Sector

Nexperia chips, while not technologically advanced, are required in large volumes across the automotive industry. Automakers such as Volkswagen and BMW, along with suppliers like Bosch, are part of Nexperia’s supply network. Both Volkswagen and BMW stated that their production has not yet been impacted but confirmed they are actively identifying potential supply risks.

Mercedes-Benz is monitoring the situation and engaging with relevant stakeholders, while Stellantis is collaborating with Nexperia and other suppliers to assess potential impacts and develop mitigation measures. The European automotive sector is already contending with various challenges, including tariffs, foreign competition, and weak demand.

China’s Stance

China’s commerce ministry commented on the Nexperia situation on Thursday, expressing opposition to interference in the internal affairs of enterprises through administrative means. The ministry stated it would take necessary measures to safeguard the lawful rights and interests of Chinese enterprises.

Outlook

The Nexperia dispute highlights the ongoing trade tensions between major global economies, particularly as President Donald Trump’s administration continues to exert pressure on technology sectors. A Nexperia spokesperson indicated the company is engaging with Chinese authorities to seek an exemption from the restrictions, hoping to resolve challenges soon in the best interests of all parties.