Global Automakers Face Production Halts as Nexperia Chip Dispute Escalates

Volkswagen AG has warned its staff of potential temporary production halts at some German facilities, including Zwickau and Wolfsburg, citing a semiconductor supply disruption stemming from a geopolitical standoff involving Dutch chipmaker Nexperia. This development follows escalating trade tensions between China and the Netherlands, which have severely impacted Nexperia's ability to supply critical components to European automotive manufacturers. While Volkswagen stated that some planned pauses for models like the Golf and Tiguan were scheduled, the company is closely monitoring the Nexperia situation, according to BILD and Reuters reports.

The crisis began on September 30, 2025, when the Dutch Ministry of Economic Affairs invoked special powers under the Goods Availability Act to place Nexperia under supervised control. This unprecedented move, citing "serious governance shortcomings" and concerns over European technological security, led to the suspension of Chinese CEO Zhang Xuezheng and the appointment of an independent non-Chinese director with decisive voting authority. The Dutch government gained the power to reverse or block management decisions deemed harmful to national interests.

In direct retaliation, the Ministry of Commerce of the People’s Republic of China implemented an export-control notice on October 4, 2025, preventing Nexperia China and its subcontractors from exporting certain finished components and sub-assemblies manufactured in China. This action has effectively crippled a significant portion of Nexperia's supply chain, as the company produces a large volume of semiconductors in the Netherlands, with the majority packaged and assembled in China before being sold globally.

The German Association of the Automotive Industry (VDA) noted on October 21, 2025, that Nexperia, a key supplier of semiconductors for vehicle electronics, informed German automakers and suppliers on October 10 that it could no longer guarantee chip supplies. Simon Schutz of the VDA warned that the situation "could soon lead to significant production restrictions—or even a stop in production—if the interruption of Nexperia chip deliveries cannot be resolved in the short term." The European Automobile Manufacturers’ Association (ACEA) has cautioned that Nexperia chip stocks may last only weeks, with sourcing alternatives potentially taking months.

Nexperia, owned by Chinese parent company Wingtech Technology, is not a direct supplier to Volkswagen, but its chips are integral to components provided by Volkswagen's direct suppliers. The broader geopolitical context underscores a growing trend of Western states intervening in foreign-owned tech firms when risks to technological sovereignty are perceived. This dispute highlights the fragility of global supply chains and the critical role of semiconductors in modern vehicle manufacturing, affecting not only Volkswagen but also other major automakers like GM, Honda, and Nissan.