China is urging the Netherlands to reverse its decision regarding Nexperia, a Dutch-based chip manufacturer now under Chinese ownership, and to restore stability to the global semiconductor market. This call comes amid a growing dispute over technology transfer and national security concerns.
In September, the Dutch government invoked a seldom-used, Cold War-era law to gain effective control of Nexperia. Sources suggest this action was prompted by security apprehensions raised by the United States. The move has, in turn, led to retaliatory measures from China, which has reportedly restricted its own products from leaving the country. This development has triggered anxieties among global automakers, already grappling with persistent chip shortages, due to potential disruptions in Nexperia’s component supply.
A spokesperson for China’s Ministry of Commerce stated that the Netherlands should “immediately correct its mistakes and clear the obstacles to restoring the stability and security of the global semiconductor supply chain.” The spokesperson further expressed bewilderment at the Netherlands’ apparent indifference to the global industry’s unease, criticizing its “stubborn insistence on its own way” and lack of a “responsible attitude towards the security of the global semiconductor supply chain.”
Nexperia specializes in manufacturing “foundation chips”—essential components like transistors, diodes, and power management units. These chips, though often considered low-tech, are critical for a vast array of electronic devices, including automobiles, where they are integral to systems ranging from battery management and lighting to braking, airbags, and infotainment. The company’s operational model involves manufacturing these chips in Europe, followed by assembly and testing in China, before re-exporting them to global customers.
The dispute has sent ripples through the automotive sector. Industry groups have voiced concerns that the supply chain disruptions stemming from the Nexperia situation have not been fully resolved, leaving component availability in a state of uncertainty. Automakers such as Nissan and auto supplier Bosch have previously warned of potential production impacts. The German Association of the Automotive Industry (VDA), representing major manufacturers like Volkswagen, Mercedes-Benz Group, and BMW, had previously cautioned of heightened supply risks, particularly for the first quarter of 2026.
This situation underscores the intricate geopolitical dynamics now shaping the semiconductor industry, a sector critical to global economic and technological advancement. The reliance on complex, international supply chains, coupled with escalating national security considerations, creates a challenging environment for both technology companies and governments worldwide. The outcome of this dispute could have significant implications for the future of global chip production and trade.
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