China-Netherlands Tussle Over Nexperia Threatens Global Auto Supply Chain

Honda Motor Co. Ltd. has taken significant measures in response to a growing shortage of semiconductors, specifically stemming from disruptions surrounding the Dutch chipmaker Nexperia NV. Honda has announced production cuts at its Alliston, Ontario plant, the first major automaker to publicly highlight these concerns. On October 27, Honda reduced output by 50% at the facility, which manufactures the CR-V and Civic models. The plant is scheduled for a complete shutdown starting October 30, with operations resuming at half capacity on November 6. Reports from U.S. media, including The Wall Street Journal, indicate that Honda is adjusting schedules at other North American plants to manage the constrained supply of parts, underscoring the broader scale of the issue. [para. 1][para. 2][para. 3]

The origins of the crisis can be traced to a September 30 Dutch government order that froze Nexperia’s assets and management, effectively separating it from its parent, Chinese-listed Wingtech Technology Co. Ltd. In retaliation, on October 4, China’s Ministry of Commerce imposed export restrictions on certain Nexperia products manufactured in mainland China. These actions have had ripple effects throughout the global automotive supply chain, as Nexperia is a crucial—but often overlooked—supplier of discrete and power chips, responsible for about 5% of the global automotive discrete semiconductor market. Though this market share may seem modest, Nexperia's components are integrated into hundreds of electronic control units in each modern vehicle. A sustained supply disruption could create significant bottlenecks, reminiscent of the pandemic-era shutdowns. [para. 4][para. 5]

Industry leaders and associations are expressing mounting concern. The European Automobile Manufacturers’ Association (ACEA) warned on October 16 that a failure to secure Nexperia supplies could halt automotive production in Europe. Similar alerts were issued by Germany’s VDA, Japan’s JAMA, and the U.S. Motor & Equipment Manufacturers Association (MEMA), with forecasts of “severe impacts” within two to four weeks if the impasse continues. Automaker executives in the U.S. have also raised alarms: GM CEO Mary Barra stated on October 21 that they are closely monitoring the chip supply from China, while Ford CEO James Farley called the issue an "industry-wide problem" requiring urgent resolution to avoid fourth-quarter cuts. [para. 6][para. 7]

While Nexperia’s chips are less complex than some semiconductor products, they are ubiquitous in vehicle systems. According to S&P Global Mobility, virtually no automaker can be fully insulated from this disruption. Companies are seeking substitutes from competitors like Infineon, ON Semiconductor, and STMicroelectronics, but switching may take months, and inventories of Nexperia chips are thin. U.S. distributor Smith noted that surging demand has depleted supplies and inflated prices, with a full alleviation unlikely until the first quarter of 2026. [para. 8][para. 9][para. 10]

The crisis threatens Nexperia’s own business, especially in China, which makes up nearly half its revenue. About 70% of final assembly and testing occurs in Dongguan, but this operation depends on wafer supplies from Europe, with only one to two months of inventory remaining. If customers seek alternatives, Nexperia risks lasting loss in an intensely competitive market. Industry analysts and global groups agree that a rapid, pragmatic resolution is urgently needed to avert further damage to both manufacturers and suppliers. [para. 11][para. 12][para. 13]

Nexperia, once a division of NXP Semiconductors, was acquired for $2.75 billion by a Chinese consortium in 2017 and integrated into Wingtech between 2018 and 2020. Its main business, auto chips, constitutes nearly 60% of its revenue. [para. 14]