Nexperia was created in 2017 when NXP sold its Standard Products division to two Chinese investor Groups, JAC Capital and Wise Road Capital, for $2.75 billion. Towards the end of 2019, a Chinese electronics and computer equipment producer called Wingtech Technology acquired a controlling stake in Nexperia for $3.6 billion, and shortly after its founder, Zhang Xuezheng, became CEO.
The company is based in Nijmegen, Netherlands and around 60% of its products are sold within the automotive industry. These chips are not cutting-edge but have multiple controlling applications throughout the vehicle including lighting, airbag and power window systems. The company’s customers tend to be Tier 1 suppliers and OEMs are largely based in Europe and the US, with some also in Asia.
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Origins of the Dispute
This disruption is believed to be a result of the US and China jostling for leverage in the build up to a key summit between President Donald Trump and China’s Xi Jinping planned for the end of October 2025. Indeed, China has recently responded to the introduction of new punitive US tariffs on key Chinese imports by restricting the exports of rare earth metals, which are increasingly important inputs to the automotive industry.
Within these disputes, Nexperia’s parent corporation, Wingtech, was placed on a “blacklist” of companies which have been subject to export controls by the US since December 2024. From September 29, 2025, this was extended to include subsidiaries of companies on the list, including Nexperia. On September 30, 2025, the Dutch government took control of Nexperia, invoking a Cold War-era law that permits such actions for national security reasons. The government cited “serious governance shortcomings” as the rationale for the takeover, although other reports suggest that the move was influenced by pressure from the US.
This was countered by the Chinese placing export controls on Nexperia’s Chinese factories and subcontractors from October 4, 2025. Even for the semiconductor manufacturers with factories in Europe this is debilitating with most chips still transported to China for final product integration and testing. As such, Nexperia sent a warning on October 10, 2025, informing its clients that it can no longer guarantee delivery of chips to the automotive supply chain. On October 14, 2025, Zhang was replaced as CEO temporarily by the CFO, Stefan Tilger.
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By GlobalDataThe situation has been further exacerbated by Nexperia’s Chinese subsidiary declaring independence from its parent company in Nejmegen, Netherlands, on October 19, 2025. An open letter outlining the separation stated that Chinese operations were to only follow local instructions.
The Current State of Play
ACEA, the European automakers lobbying group, issued a statement on October 15, 2025, projecting that the company’s stocks of chips may only last a few weeks. They also stated that the issue is cross-industry affecting many suppliers and practically all its members. Therefore, it is likely that production stoppages will occur if a quick resolution is not found.
Similarly, the Alliance for Automotive Innovation in the US, which represents many large OEMs like Ford, Toyota and Volkswagen, also urged for a quick resolution. If this issue persists it could lead to assembly stoppages as early as November.
The main European automakers of BMW, Mercedes-Benz, Renault, Stellantis and Volkswagen Group have all announced that they are monitoring the situation or actively working with suppliers to mitigate any risks from a potential shortage. So far, none of these OEMs have announced any closures or reductions in vehicle production due to a shortage in Nexperia chips.
Volkswagen did stop build of the Golf and Tiguan in its Wolfsburg facility for a day on October 24, 2025, but stated that this closure was long-planned and reportedly not a result of chip shortages. The group has also confirmed that vehicle build through October at Dresden, Emden, Mosel (also known as Zwickau), Osnabrück and Wolfsburg has been secured. However, the Group added that short-term effects on vehicle production cannot be ruled out.
Mitigation Strategies
It should be noted that, unlike the previous chips shortage crisis initiated by the COVID pandemic, this disruption is a result of geopolitics and, therefore, can potentially be resolved quickly through negotiation and trade agreements.
Nevertheless, it is understood that OEMs and Tier 1 suppliers are actively seeking alternative chip sources to protect against any enduring supply-side disruption. The chips sourced from Nexperia for automotive use tend not to be cutting edge which suggests there should be other manufacturers that can produce them. Alternative suppliers include Infineon, ON Semiconductor and STMicroelectronics, although validation processes for new component sourcing are often lengthy and costly.
While experiences are varied, Valeo, for instance, has reportedly managed to find replacements for Nexperia across almost all its automotive range – indicating that this strategy is viable. On the other hand, Bosch has announced that it will implement short-time work at its lead plant for engine control unit build within its Salzgitter site.
Conclusion
If Nexperia is unable to begin deliveries again in the short term and if suppliers cannot successfully procure chips from an alternative source before available stocks run out, then production closures and slowdowns cannot be ruled out.
Stock piling and component rationing through OEM model ranges may again make a return to the supply-chain echoing some of the strategies enacted during the severe chip shortages in 2021. However, it is expected that political stakeholders will find a solution for the current stand-off and, together with contingency planning by the industry, disruptions are anticipated to be minimized. Of course, risks remain and we continue to monitor the evolving situation as we move into November.
James Norris, Manager, Production Forecasts
This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center.
