Nexperia (NXP) Chip Crisis Unfolds…

In the space of a few weeks, Nexperia (chip manufacturer based in the Netherlands) has become embroiled in an international conflict with the Chinese due to U.S. Department of Commerce Bureau of Industry and Security’s Entity List. The Agency’s new rule stipulates that any company that is “at least 50 percent owned by one or more entities on the Entity List or the Military End-User (MEU) List will itself automatically be subject to Entity List/MEU List restrictions.”

Nexperia was acquired by Chinese firm Wingtech Technology in 2019, and the technology company was placed on the BIS Entity List in December 2024. Therefore, based on the BIS’s new “Affiliates Rule,” as of September 29 Nexperia itself fell into the scope of the Entity List, becoming subject to the same export controls as its Chinese parent company.

September 30 saw the Dutch government scrambled to take back control of Nexperia by invoking an obscure, Cold War-era law known as the Goods Availability Act. According to the Dutch Government, this measure was carried out “following recent and acute signals” that “posed a threat to the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities.” Some reporting has suggested that the Dutch government’s actions were a response to mounting pressure from the U.S. over the past few months. As of now, the Netherlands has denied these claims.

On October 4, Chinese Ministry of Commerce issued its own export controls. MOFCOM prohibited Nexperia’s Chinese unit and its subcontractors from exporting finished components and sub-assemblies manufactured in China to foreign countries. The Dutch government has since made several attempts to seize back control of Nexperia.

As of October 22, no resolution had been reached. In the wake of these conversations, Chinese Commerce Minister released a statement positioning the blame on the Netherlands for the impending supply chain fallout.

As most of Nexperia’s semiconductors are manufactured in China, the Chinese Ministry of Commerce’s export restrictions pose the greatest threat to global supply chains. Several automakers are already sounding the alarm about an impending chip shortage and subsequent production stoppages.

October 22, Volkswagen told its workers that a production stoppage could be imminent due to the supply chain issues triggered by the Nexperia crisis. Germany newspaper The Bild went so far as to cite sources saying that work stoppages were already being scheduled to start the following Wednesday, October 29. “In view of the dynamic situation,” a Volkswagen spokesperson told Reuters, “we cannot rule out an impact on production in the short term.”

October 23, Nexperia notified the Japanese Automobile Manufacturers Association (JAMA) that it may not be able to guarantee chip deliveries. JAMA said that the semiconductors in question are essential components in electronic control units, and any shortages could reverberate across JAMA’s members, which include Toyota, Honda, and Nissan.

With Automotive trade groups aggressively voicing their concerns about this escalating crisis. Many tier 1& 2 OEMs are urgently looking at solutions to maintain continuity of NXP semiconductors, which is bound to have a major global consequences with available inventory and other semiconductor manufacturers who offer similar me-too devices.

Nexperia is currently working with Chinese authorities to secure an exemption and is engaged in discussions with both national and local government bodies to address the existing Chinese export restrictions…. however the fall-out could take considerable time to clear and could have big ramifications on western companies with majority Chinese owned backing.