The Nexperia Chip Crisis: An Overview of the Situation Automakers are Facing
Published: January 26, 2026 | Author: Katelynn Chin
Semiconductors are the core of the automotive industry, an essential component to the production of all the vehicles that are on the streets today. While this production is usually not emphasized upon to the layman, a recent crisis has drawn it to attention.
Nexperia is a semiconductor manufacturing company owned by Wingtech Technology Co, a Chinese company, with headquarters based in Nijmegen, the Netherlands. It supplies semiconductors to car manufacturers such as Volkswagen, Toyota, BMW and Mercedes-Benz. Citing “recent and acute signals of serious governance shortcomings and actions” in Nexperia, the Dutch government invoked the Goods Availability Act on September 30th, taking control of Nexperia (Ministerie van Economische Zaken, 2025). This is a law established in 1952 that allows the government to take control of essential goods during times of crisis. While they continue to allow day‑to‑day operations, a Dutch court replaced Nexperia’s former Chinese CEO with its current Dutch CEO, and the government reserves the right to block any major decisions (Shamim, 2025).
Beijing calls this act an “improper interference in Nexperia’s internal corporate affairs” (MOFCOM Spokesperson’s Remarks on Nexperia‑Related Issues, 2025). In response, the Chinese Ministry of Commerce issued export controls on October 4th, prohibiting exports of Nexperia’s contractors’ and subsidiaries’ chips from China to Europe. On October 9th, it also included five new rare earth metals in export control (Reuters, 2025), most of which are used to produce essential chips and semiconductors in the automotive industry.
This has caused a major disruption in global supply chains of the automotive industry. This impacted many economies, but had a particular effect on Germany, as the industry makes up 6% of Germany’s GDP and directly employs 780,000 people in the workforce (Gonzalez, 2025). Because of the necessity of these semiconductors in car production, car companies were forced to slow down production. With a combination of Trump’s recent tariffs and this semiconductor crisis, Honda has lowered its annual profit forecast by 64%, from 494.6 billion to 314.8 billion yen (Jazeera, 2025). Volkswagen also warned of potential product disruption in late October (The Nexperia Chip Crisis, Explained – Z2Data, n.d.).
On October 27th and 28th, Honda announced it would reduce production at U.S. and Canada factories and halt production in Mexico respectively, because of disruptions in chip deliveries. Similarly, other automakers warned of potential supply disruptions due to the lack of supply of this crucial car part. The ripple effect caused by these export controls goes to show how interconnected our world is in international business. A single item could have parts sourced from all over the world, and any minor change could affect the stability of entire industries’ supply chains.
After a series of negotiations, China announced on November 10th that it would exempt compliant exports of Nexperia chips for civilian use, easing the global shortage slightly. It hopes that the EU can make progress with the Netherlands in resolving the clash. While this situation is still fluid and cannot be predicted, Honda has announced recently that it has obtained semiconductors and some alternatives from other sources and will begin resuming production at the end of November (MBN Staff, 2025). They have reduced their reliance on Nexperia’s chips and will be able to continue limited production through future supply shocks. With increasing political tensions between countries, it may be inevitable that trade is affected. This can make global supply chains unpredictable, and companies may consider diversifying their input suppliers to avoid major disruptions in their production. Nexperia’s direct competitors, including Infineon Technologies, Onsemi and STMicroelectronics (Utmel, 2025), may hence see increased sales and clientele benefiting from this crisis.