Automotive officials warn of 'devastating' chip storage as Nexperia halts China-bound wafer shipments — companies working 'around the clock' to find alternatives

A growing dispute inside one of Europe’s largest chipmakers is threatening to derail automotive production across the continent just as the industry begins to recover from years of semiconductor supply instability.

Netherlands-based Nexperia halted shipments of silicon wafers to its Chinese backend facility in October. The internal freeze follows the Dutch government’s October decision to seize control of the company, oust its China-based CEO, and impose tighter oversight over operations. That move, prompted by what officials described as “serious governance shortcomings,” has fractured the relationship between Nexperia’s EU and China units and left carmakers warning that inventories could run out within weeks, a potentially "devastating" outcome.

Executives from major OEMs and Tier-1 suppliers told the Financial Times that they are already working “around the clock” to identify alternative sources. One official said that without resumed wafer deliveries from Europe, stocks in China could be exhausted by mid-December. The Nexperia plant in China typically handles final assembly and testing for the bulk of the company’s automotive chips, which are then shipped globally.

While some limited exports have resumed following a recent easing of Beijing’s own export controls on chipmaking tools and materials, that partial reopening has not resolved the impasse. According to ACEA, the European car industry’s main trade group, the issue is no longer regulatory but operational, with Nexperia Netherlands having suspended direct supply to China, citing financial misconduct by the subsidiary and a refusal to comply with internal directives.

“We welcome the Chinese announcement lifting export controls,” ACEA said in a statement, “but we will not have enough chips to meet global demand as long as there are restrictions on the export of wafers to China. We are moving in the right direction, but it is not solved yet.”

The risk is significant because Nexperia doesn’t make high-performance processors or AI chips. Instead, it supplies commodity discrete parts like MOSFETs, ESD protection circuits, and small-signal logic that go into everything from airbag controllers to window switches. These are chips that typically cost under a dollar but are required in high volume, with some vehicles needing dozens of units per board.

Volkswagen said that while its plants in Germany have not yet been impacted, the situation remained “dynamic and uncertain.” Other automakers suggested they had only a few weeks of buffer stock left and urged the company to resolve the standoff internally.

Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.