What to know about the crisis at chipmaker Nexperia that sent automakers scrambling

A battle for control of a little-known chipmaker has threatened global auto production by choking off the semiconductor supply chain, though there are signs the crisis is inching toward a resolution.

The power struggle over Nexperia, a Chinese-owned Dutch semiconductor maker, highlights how technology supply chain vulnerabilities are squeezing auto makers, most notably forcing Honda to halt production at a Mexican factory making its popular HR-V crossover for North American markets. It also exposes how Europe is caught in the middle of the wider geopolitical showdown between Washington and Beijing.

Here’s a look at the dispute:

A surprise move

The turmoil erupted into public view in mid-October, when the Dutch government announced it had invoked a rarely used World War II-era law to take effective control of Nexperia weeks earlier.

The Dutch ministry of economic affairs said it took action because of national security concerns. Officials said they intervened because of “serious governance shortcomings” at Nexperia, asserting control to prevent the loss of crucial tech know-how that could threaten Europe’s economic security.

Nexperia’s Chinese owner Wingtech Technology, a partially state-owned company, is at the heart of the dispute. Amid the boardroom battle, a Dutch court granted the ministry’s request to oust Nexperia’s Chinese CEO Zhang Xuezheng. American officials told the Dutch government he would have to be replaced to avoid trade restrictions, according to a court filing.

What is Nexperia?

Nexperia makes simple semiconductors such as switches and logic chips. The auto industry — one of Nexperia’s biggest markets — uses its chips for numerous functions, such as adaptive LED headlight controllers, electric vehicle battery management systems and anti-lock brakes.

Headquartered in the Dutch city of Nijmegen, Nexperia was spun off from Philips Semiconductors two decades ago. It was eventually purchased by China’s Wingtech Technology in 2018 for $3.6 billion.

Nexperia has wafer fabrication plants in Britain and Germany. It operates an assembly and testing center in China’s southern manufacturing heartland of Guangdong — which accounts for around 70% of its end-product capacity — and similar centers in the Philippines and Malaysia.

Geopolitics

The dispute is part of the broader struggle between the U.S. and China over tech supremacy, which has left Europe caught in the middle.

It stems from Washington’s decision late last year to place Wingtech on its “entity list,” which subjects companies to export controls because of national security risks. In late September, the U.S. expanded that list to Wingtech’s subsidiaries, including Nexperia, pressuring allies to follow suit.

After the Dutch government asserted control of Nexperia, Beijing responded soon after, blocking the export of Nexperia chips from its assembly plant in the Chinese city of Dongguan. It blamed the Netherlands for “turmoil and chaos” in the chip supply chain.

There were signs of hope following last month’s high-profile meeting between U.S. President Donald Trump and Chinese leader Xi Jinping, when the White House said Beijing would ease the export ban as part of a U.S.-China trade truce.

Despite Beijing also confirming exports would be allowed to resume, Nexperia’s Chinese unit said headquarters suspended shipments of wafers used to make chips to its Chinese factory, potentially crimping its ability to deliver finished products.

Nexperia’s head office hit back in a statement Wednesday, saying the Chinese unit refused to pay for the wafers and accused it of “ignoring the lawful instructions” from its global management team. The company said it can’t guarantee the quality of any chips delivered from its China plant since Oct. 13.

Resolution

The European Union’s trade commissioner, Maros Sefcovic, on Saturday noted “encouraging progress,” writing on X that China’s Commerce Ministry had confirmed “further simplification” of export procedures for Nexperia chips to the EU and global customers.

In Beijing, the Commerce Ministry also said Saturday that it agreed to a Dutch request to send representatives to China for “consultations.”

But it noted that the Netherlands had not taken any concrete actions yet to restore the global semiconductor supply chain since the Dutch government said days earlier it would take “appropriate steps on our part where necessary.”

Economics Affairs Minister Vincent Karremans had said in that statement that “the Netherlands trusts that the supply of chips from China to Europe and the rest of the world will reach Nexperia’s customers over the coming days.”

Honda has received word that Nexperia’s shipments from China have resumed, Executive Vice President Noriya Kaihara told reporters Friday. He said the Japanese automaker expects to resume production during the week of Nov. 21 at its plant in Celaya, Mexico, which can make up to 200,000 vehicles a year. KELVIN CHAN & CHAN HO-HIM, MDT/AP