Never heard of Nexperia until about a week ago? Me neither. But suddenly its all over the news, especially automotive news. As of today, Volkswagen along with some other European and Japanese automakers has warned that production could stop within weeks if this issue is not sorted out. Although VW does not directly do business with Nexperia, many of its suppliers buy chips from the company.

How did this start?

In September, the U.S. Bureau of Industry and Security ordered export controls on any company that is partly owned by a ‘blacklisted’ firm. In an unusual move, the Dutch government took control of Nexperia (originally NXP Semiconductors, a division of Phillips) but now fully owned by Wingtech Technology based in China since 2018. As a result of this move by the Dutch government, the Chinese government which partly owns Wingtech decided to do a tit-for-tat and ban Nexperia’s subcontractors in China who play a crucial role in the supply chain to stop shipping the chips out of China. This resulted in sending shockwaves across industries around the world who use Nexperia products. Volkswagen saw a 2% decline in its shares following the news this week.

What happens next?

The Minister of Economic Affairs in Netherlands Vincent Karremans who invoked the 1952 cold war era law known as the Goods Availability Act to seize control of the Chinese company in Netherlands has now been in contact with his Chinese counterpart, Wang Wentao to find a resolution to this issue. Meanwhile Nexperia has issued a force majeure declaration on October 9, thereby communicating to its vendors which include automakers and auto parts suppliers that they cannot guarantee chip supply in the foreseeable future till there are any changes to the current circumstances.

Who could be affected?

Companies that have indicated their supply chain might get impacted are as follows:

• VW Group
• BMW
• Mercedes-Benz
• Volvo
• Renault
• Stellantis Group
• Toyota
• Honda
• Nissan
• Mitsubishi Electric

Sources:

CNBC: https://www.cnbc.com/2025/10/22/volkswagen-warns-of-output-stoppages-amid-nexperia-chip-disruption.html

Reuters – https://www.reuters.com/world/china/dutch-economy-minister-says-he-spoke-with-chinese-counterpart-about-chipmaker-2025-10-21/

The Edge Malaysia – https://theedgemalaysia.com/node/774852

Japan Times – https://www.japantimes.co.jp/business/2025/10/23/companies/chipmaker-short-supply-japan-auto-parts/#:~:text=%22We%20have%20been%20in%20a,to%20alternative%20products%20as%20necessary.%E2%80%9D

POLITICO – https://www.politico.eu/article/car-sector-fears-sequel-pandemic-era-microchip-shortages/#:~:text=%E2%80%9CNexperia%20is%20not%20a%20direct,production%20cannot%20be%20ruled%20out.%E2%80%9D