China warns the Netherlands to ‘immediately correct its mistakes’ over Nexperia saga that has disrupted auto production — chip shipments remain suspended, auto industry suffering from undersupply

The Chinese Ministry of Commerce said in a statement that the Netherlands should “immediately correct its mistakes and clear the obstacles to restoring the stability and security of the global semiconductor supply chain.” Beijing said this in relation to the ongoing Nexperia crisis, in which the Dutch government seized control of the chipmaker from its Chinese parent, Wingtech, allegedly to safeguard “crucial technical knowledge.” However, this move has resulted in a component shortage for the automotive industry, reports CNBC, especially as the company supplies approximately 70% of the global market for automotive chips.

Although Nexperia does not manufacture cutting-edge semiconductors like TSMC, it still makes the cheap, low-tech chips that all modern cars use. These range from chips for managing advanced battery and engine systems to those needed for lights, sensors, and electric window controls.

Because of this drama, autom manufacturers have braced for the resulting disruptions, with both Japanese and German auto manufacturers bracing for its impact as far back as October 2025. True enough, Honda has had to temporarily shut down five plants across Japan and China due to the chip shortage, with these assembly sites reverting to reduced output when they return online.

There have been conflicting reasons for the government takeover aside from the supposed illegal technology transfer. One report says that the Wingtech CEO misappropriated $200 million in Nexperia funds to rescue his own company, while there have also been suggestions that the U.S. was behind the move as it put Wingtech in its “Entity List” in December 2024, with the expanded “Affiliates Rule” putting Nexperia at risk of being included in the U.S. blacklist, especially as the Chinese company owns a 75% stake on the Dutch company.

While there have been attempts to resolve the issue, it seems that the Netherlands and China offices of the automotive chipmaker have yet to resolve anything. At the moment, Nexperia Netherlands has suspended wafer shipments to its China factory, so even though Beijing has already allowed the Dongguan plant to resume exports to automakers on a case-by-case basis, it’s currently facing a significant gap in wafer supply. This has led to Nexperia China seeking new wafer suppliers to replace those that were supposed to come from the Netherlands, but it will likely take six months or more before it can qualify a new vendor.

In the meantime, automakers would have no choice but to reduce output and find alternative sources for their chip needs. This issue highlights the pitfalls of relying on just a few suppliers for the majority of our chip supply, with a disruption in just one of them having a ripple effect across the globe.

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