Nexperia, a key supplier of power and standard semiconductors for the automotive sector, remains at the center of a geopolitical standoff. Despite the Dutch government’s intention to hold talks with China, there are still no signs of easing tensions between Nexperia and its Chinese parent company, Wingtech Technology.
The European Automobile Manufacturers’ Association (ACEA) warned this week that automakers are on the verge of halting production due to the chip shortage. “We may be only days away from assembly line shutdowns,” said ACEA Director General Sigrid de Vries. “We urge all parties involved to intensify diplomatic efforts to resolve this critical situation.”
According to S&P Global Mobility, the affected chips are legacy semiconductors used in essential vehicle functions such as windshield wipers and power window controls — components with very limited alternative sourcing options.
Volkswagen and German Carmakers Sound the Alarm
German automakers have been hit the hardest. Volkswagen issued an early warning just a week after the disruption began, stating on October 30 that it may not know until early November whether production will be affected. Other major manufacturers are maintaining 24/7 monitoring teams to mitigate risks.
“At Nexperia, we’ve set up a cross-functional war room within our building as the central hub of operations,” Stellantis CEO Antonio Filosa told investors during Thursday’s quarterly earnings call. “We’re taking daily actions to extend component life cycles and manage what has become a global issue across the entire industry.”
Since the COVID-19 pandemic disrupted chip and component supplies in 2020, these “war rooms” have become standard practice across the automotive sector. Several industry insiders confirmed to CNBC that their companies have created similar command centers to evaluate alternative sourcing strategies, including cooperation with key suppliers and open-market purchases.
“The entire automotive supply base is working to assess the potential impact on production continuity,” the U.S.-based supplier association MEMA said in an email statement. “Chips and diodes are foundational to automotive systems—from infotainment to door handles, steering, and braking. Missing even one diode or chip can halt vehicle assembly.”
Automakers Respond: Caution, Contingency, and Concern
While Toyota CEO Koji Sato said his company has not yet been affected, most other automakers have acknowledged potential exposure. Honda became the first major OEM this week to cut production due to Nexperia-related chip shortages, impacting key North American plants in the U.S., Canada, and Mexico.
“We are managing semiconductor supply issues across the industry and making strategic production adjustments as needed,” Honda said in a statement, calling the situation “highly volatile.”
If unresolved, analysts expect the disruption to ripple across more automakers. “I think some factories will have to shut down,” Volvo Cars CEO H?kan Samuelsson said in a recent interview. “You always have to be just a bit smarter than others so you’re not the one forced to stop production.”
Ford CEO Jim Farley called the issue “deeply political,” noting during a Washington, D.C. visit that both U.S. and Chinese governments are involved in finding a resolution. “This is an industry-wide problem,” he said. “To avoid production losses in Q4, we need a fast diplomatic breakthrough.” Farley added that automakers have become “much better” at optimizing chip procurement since the 2021 crisis.
General Motors CEO Mary Barra echoed that sentiment: “This is an industry issue we expect to resolve soon. While production could be affected, our teams are working around the clock with supply chain partners to minimize disruption,” she said during GM’s earnings call.
Executives from Volvo, Mercedes-Benz, and other major brands have shared similar messages with investors and the media. In Brazil, local governments are reportedly engaging with Chinese authorities to seek solutions, warning that automakers there may have to suspend operations within weeks if the shortage persists.
A Geopolitical Puzzle for the Netherlands
The most direct solution would be for Nexperia to resume normal supply. That, however, places mounting pressure on the Dutch government — the source of the export restrictions.
The tension intensified after the U.S. and China jointly announced on October 30 that Washington would delay enforcing its “50% ownership rule” against Chinese semiconductor affiliates.
This development undercuts the Dutch government’s original justification for intervention, leaving its new trade minister to navigate the consequences of an increasingly awkward policy decision. Scramble for Substitutes Across the supply chain, companies are racing to identify alternate chip sources to limit production fallout.
Volkswagen says it has already secured replacement semiconductors from other suppliers to “offset the loss from Nexperia,” according to Christian Vollmer, the brand’s head of production. GM’s Barra reiterated that teams are working “day and night” to minimize disruption.
A spokesperson for Robert Bosch, the world’s largest auto supplier, said the company is “leveraging alternative sources and optimizing inventory levels” across its global facilities but warned that “temporary production adjustments cannot be ruled out” if export restrictions persist. Verification and qualification remain key bottlenecks.
When a second-tier supplier obtains new diode or power components, it must secure approvals not only internally but also from Tier-1 suppliers and automakers — a process that can take weeks or even months.
Compatibility poses another hurdle: while other companies manufacture chips similar to Nexperia’s, it remains unclear whether global capacity can meet both automotive and industrial demand. Rising competition could further drive up prices.