‘This situation cannot persist’: Nexperia warns clients still face imminent production outages

Nexperia, the Dutch semiconductor manufacturer, has issued an urgent appeal to its Chinese division to expedite the restoration of supply chain operations. In a letter made public, the company highlighted that clients from various sectors are facing "imminent production outages." The communication from Nexperia's Dutch headquarters, released on Thursday, follows unsuccessful attempts to engage in direct dialogue through traditional channels, which yielded no substantial replies. This letter represents a new chapter in an ongoing saga that poses a significant threat to global automotive supply chains and has intensified tensions between the Netherlands and China over technology transfers. Nexperia expressed appreciation for the Chinese government's commitment to easing export restrictions from its facilities and those of its subcontractors, which are crucial for maintaining product flows to international markets. However, the company emphasized that the current situation is untenable, with customers urgently reporting the risk of production halts. The letter urged leadership at Nexperia's Chinese entities to take immediate steps to restore established supply lines. Wingtech, the Chinese parent company of Nexperia, was unavailable for comment when approached by CNBC. Nexperia specializes in manufacturing essential components such as transistors, diodes, and power management chips. These foundation chips, while relatively low-tech and cost-effective, are integral to nearly every electrically powered device, including critical automotive systems such as battery connections, lighting, sensors, braking, airbag controls, entertainment systems, and power windows. The current crisis began last September when the Dutch government invoked a Cold War-era regulation to assert control over Nexperia, a move prompted by U.S. security concerns. In retaliation, China implemented restrictions on the export of Nexperia’s products, raising alarms among global automakers who rely on these components. Recently, there appeared to be a slight easing of tensions, as the Dutch government announced a pause on its intervention following discussions with Chinese officials. This development raised hopes that the supply chain disruptions might soon be resolved. However, uncertainty lingers, according to Rico Luman, senior economist in transport and logistics at ING. He noted that while the Dutch government's measures have been lifted, ongoing discussions about the corporate relationship with Wingtech remain unresolved. Luman further explained that the issues extend beyond just finished chips; there are also concerns regarding wafer supplies from Europe to the Chinese branch. Renowned companies, including Nissan and Bosch, have voiced concerns about impending shortages. A representative from the German Association of the Automotive Industry (VDA), which includes major players like Volkswagen, Mercedes-Benz, and BMW, highlighted the heightened risks to supply chains, particularly for the first quarter of 2026. Although the German automotive sector has managed to maintain stable production levels through substantial efforts in recent weeks, the political interventions affecting Nexperia's components have yet to be fully addressed, leaving component availability in a precarious state. Luman draws parallels between the Nexperia situation and China's control over rare earth exports, asserting that European manufacturers are increasingly dependent on supplies from China. He remarked on the opacity of the process, noting that it remains unclear which buyers can access which chip supplies. This ongoing crisis continues to underscore the fragility of global supply chains and the complex interplay between technology, politics, and manufacturing.