Breaking the Circuit: What the Nexperia Crisis Reveals About Dependence on China

By Nathan Abbington

At the heart of the world’s most tightly engineered industry, a single corporate rift has exposed the brittle threads binding global commerce. Nexperia, a Dutch-headquartered firm owned by China's Wingtech Technology since 2019, specializes in the unassuming yet indispensable components—diodes, transistors, MOSFETs—that form the nervous system of automobiles, from brake controls to power windows. These chips, often costing mere fractions of a cent, underpin an industry worth trillions. Yet in late September 2025, when the Dutch government invoked a long-dormant 1952 law known as the Goods Availability Act, the machinery ground to a halt, not from technical failure but from the weight of national security fears and retaliatory export curbs. This intervention, aimed at safeguarding European technological assets, triggered a cascade of disruptions that reached from Dongguan's vast assembly halls to assembly lines in Stuttgart and Yokohama. As factories idled and automakers scrambled, the episode laid bare the tensions inherent in a world where economic interdependence collides with geopolitical caution.
The sequence began with allegations of mismanagement at Nexperia's helm. Dutch authorities, citing "recent and acute signals" that threatened the continuity of crucial knowledge on European soil, moved swiftly on September 30, 2025, to assume temporary control. The act, last dusted off during Cold War scarcities, empowered the economy minister to suspend executives and veto decisions that might relocate production eastward. At the center stood Jiang Jingsong, the former CEO accused of siphoning resources—financial and operational—to bolster Wingtech's interests, including the appointment of unqualified leaders that jeopardized factories in Hamburg and Manchester. A court ruling from the Dutch Enterprise Chamber in early October sealed his ouster and stripped Wingtech of voting rights, a decision final within the national framework, though appealable to the Supreme Court on procedural grounds. Marc Hijink, an investigative journalist at NRC, captured the urgency in a South China Morning Post webinar: "there was a sense of emergency at the Dutch Department of Economic Affairs that Nexperia was doing a 180 and especially the CEO of Nexperia because he was being accused of mismanagement." This was no abstract concern; Nexperia's Hamburg facility, a key wafer producer, risked shutdown if assets flowed unchecked to China.
Beijing's response came within days, a calibrated assertion of leverage in a domain where it holds sway. On October 4, export controls froze shipments from Nexperia's Dongguan plant, which handles 70 percent of global assembly and testing after wafers arrive from Europe. The facility, sprawling across grounds the size of 11 football fields and employing thousands at wages of 6,000 to 7,000 yuan monthly, had operated ceaselessly even through the COVID-19 lockdowns. Now, machines stood silent for over three weeks, stranding finished goods and halting wafer inflows as Nexperia B.V. withheld shipments over unpaid invoices and governance breaches. Professor Li Xing of the Guangdong Institute for International Strategies explained the asymmetry in a Reuters report: "They thought they controlled Nexperia, but what they actually control is just one administrative building, the management building. In reality, 70% of the chip assembly and packaging is located in Donguan, which is very close to me, not far at all, very close to Guangju. So after they seized that, the Chinese government decided that Dongan would no longer enforce Nexperia orders and stop exporting. And once exports stop, the German auto industry and the French auto industry are in trouble." China's commerce ministry framed the measures as defensive, opposing "the Netherlands overstretching the concept of national security and its use of administrative measures to directly interfere in the internal affairs of enterprises."
The fallout rippled through the automotive sector with disquieting speed, echoing the shortages of 2021 but rooted in politics rather than pandemic. Nexperia's portfolio—Zener diodes, bipolar junction transistors, rectifiers—feeds into electronic control units essential for safety and comfort features. Suppliers like Bosch curtailed shifts, while tier-one firms such as Aumovio, ZF Group, and Hella teetered on the brink of full stoppages. Nissan, reliant on these parts for SUV production in Japan, incorporated a 25 billion yen provision into its fiscal forecasts to cushion the blow. Ivan Espinosa, Nissan's CEO, addressed the strain during an earnings call: "We have two supply constraints at the moment. Nexperia is one as you rightly said and the other is aluminum supply in the US from a fire that happened in a supplier (Novelis aluminum plant in Oswego, NY). Now the situation at both end is very fluid." Japanese giants Toyota, Honda, and Nissan faced potential work stoppages, with Volkswagen issuing warnings as early as October 22. The European Automobile Manufacturers’ Association pegged inventories at mere weeks, prompting production cuts for models from Volvo Cars to Jaguar Land Rover. BMW, sourcing indirectly, maintained schedules but through vigilant supplier ties. Nicolai Martin, a member of BMW's board for purchasing and supplier networks, noted the deceptive simplicity of the parts: “They are small and cheap parts but with relevant impact spread over the whole vehicle... Our production still runs as planned but we are in a volatile situation. That can change."
Beyond immediate halts, the crisis strained financial flows and operational trust. Nexperia's Chinese units, declaring independence from European oversight on October 26, refused wafer payments in euros, demanding yuan instead—a shift that complicated Bosch's restarts. They also misused corporate seals, opened unauthorized accounts, and disseminated misleading correspondence, prompting Nexperia B.V. to declare force majeure and question product authenticity post-October 13. In an open letter dated November 27, Nexperia B.V. pleaded for dialogue after futile outreach via calls, emails, and proposed meetings: "Nexperia continues to seek a constructive collaboration with Nexperia’s entities in China and has been requesting an open dialogue to find a path forward to restoring the regular supply of goods." The plea extended to restoring "predictable, established supply flows without delay, including production planning, delivery schedules, and transparent operational governance." Wingtech, drawing 97 percent of its third-quarter revenue from Nexperia, faced existential pressure, its stock volatile as decoupling loomed.
Diplomatic channels flickered amid the discord, a tentative bridge over deepening divides. A November 26 call between China's Commerce Minister Wang Wentao and EU Trade Commissioner Maros Sefcovic yielded a joint push for company-led resolution. Chinese authorities welcomed The Hague's November 19 suspension of the Goods Availability Act as "a first step in the right direction to easing chip supply shortages," though they insisted on full revocation and reversal of the court ruling, plus an official apology for the initial overreach. Wang Wentao reiterated Beijing's stance: “Both sides agree that … Nexperia Netherlands and Nexperia China should promptly engage in constructive communication regarding their internal corporate disputes and find an effective, long-term solution.” From the Dutch side, Economic Affairs Minister Vincent Carstens stood firm in recounted exchanges: "If time went back I would have done it all again." U.S. influence lingered in the background; the Bureau of Industry and Security's 50 percent subsidiary rule had accelerated the timeline, with Nexperia skirting entity list addition through ownership tweaks. A late-October U.S.-China trade pact suspended the affiliates rule for a year and exempted civilian chips, allowing shipments to resume by November 7, yet the corporate schism persisted.
As exemptions eased export controls for non-military uses, Nexperia confirmed on November 14 that its non-Chinese sites operated normally, with teams scouting alternatives. Dongguan's stockpiles—wafers and finished goods—could sustain months, buying time for recalibration. China, boasting 33 percent of global wafer capacity by 2023 up from 19 percent in 2015, eyed domestic substitutes via firms like Wingtech's Shanghai affiliate, though certification delays might stretch to six to twelve months for automotive-grade parts. Europe, meanwhile, pondered capacity boosts outside Asia. Koko Fong, a senior tech reporter at the South China Morning Post, observed the mutual independence: "It will carry on like this for a while but we don't hope it is the end game... both sides they kind of revealed their willingness to act independently... Wing obviously want it to still operate as one company the smoothly operated global supply chain as before because WingTech it has bet so much on this Nexperia." Shafi, a political economy reporter, added on Beijing's demands: "China said suspending it is good, but we want the order first of all to be revoked. Because now it's a suspension and you don't know when it might come back in force."
This standoff, unfolding against EU-China relations at their nadir—strained further by rare earth curbs and ASML lithography bans—compels a reckoning with supply chain architecture. The just-in-time model, prized for efficiency, falters when sovereignty trumps seamlessness. Automakers, chastened by prior scarcities, professed stockpiles of months' worth, yet Julie Boote of Pelham Smithers Associates questioned the follow-through: "You would expect them to have several months' worth of supply inventory for chips. That's what they said after the last crisis." Diversification emerges not as panacea but necessity, though costly. Ambrose Conroy, CEO of Seraph Consulting, pinpointed the oversight: "No one prepared for geopolitical disruption, and they're still not prepared." Alfredo Montufar-Helu, managing director at Ankura Consulting, tallied the toll: "Everyone is going to start talking once again about building resilience, about diversification. And then they're going to realise how expensive it is." Proactive audits of bills of materials, prequalification of alternatives, and hybrid sourcing—blending franchised authenticity with digital marketplaces—offer pathways, as urged in analyses from Sourceability and Z2Data. Tools like Datalynq flag regional overreliance, while partnerships with certified distributors ensure traceability under standards such as ISO 9001 and AS9120.
Professor Li Xing framed the deeper dependency: "What this shows is that, even in mid- and low-end segments, they depend on China. If China wants to get a grip on you, it still can. You have no way out." York Vut, an expert on European trade with China, echoed the bind: "So, China is just very very difficult to replace as a supplier. But again, the rare earth case and the next barrier case makes people reconsider what to do in the future. And that might be having a second option elsewhere." Nori Chiou of White Oak Capital Partners detailed the hurdles: "Any new vehicle component needs to undergo testing that can add months to the process of securing alternative parts." Sapna Amlani, supply chain director at Moody’s, distilled the lesson: "The Nexperia case isn’t just a governance dispute – it’s a warning shot for global supply chains... When they stop flowing, industries stall." Professor David Bailey of the University of Birmingham critiqued the precipitousness: "The Dutch government may well have had good reasons to take control but it hadn't thought through the implications... The retaliation from China was swift and brutal."
Against this backdrop, Nexperia itself embodies the paradox: a firm born of globalization, now cleaved by it. Dutch officials, per Shafi's reporting, viewed the uproar as disproportionate: "They [Dutch officials] kept pointing that out to me being like, you know, first of all, well, they all kind of thought that this got blown way out of proportion. Nobody wanted this to be like a middle finger to China... But they put their emphasis on the illegal activity that the former CEO John Shujang did that was vindicated by the court ruling which was removing financial resources and production capacities away from Nexperia Netherlands back to China." Finnbar, SCMP's chief Europe correspondent, placed it in context: "this is the lowest point that the relationship has ever been in and this was before Nexperia." China's Commerce Minister, via Koko Fong, decried the breach: "what you guys did was going against the spirit of contracts and markets principles."
As negotiations inch forward—Nexperia B.V. offering mediation, Wingtech pressing for reinstatement—the path divides. A bifurcated entity, with European wafers feeding parallel lines, might endure, eroding synergies built over decades. Wingtech's revenue vulnerability, Nexperia's quality assurances in limbo, and automakers' buffered yet wary lines all hang in balance. Nissan’s Espinosa underscored the agility born of breadth: "The good thing about Nissan is that we are a very global company. Our footprint and our supply chain is very broad. So, we have operations in almost every single part of the world. And this gives us flexibility. So we can react and we can move." BMW's Martin affirmed collaborative vigilance: “We had transparency on this topic in a few hours... We give our best to avoid impact if it comes to the political discussion. The whole topic was created through political aspects. We appreciate the fast clarification and deescalation, but the effects on the supply chain must still be managed.”
The Nexperia affair, far from isolated, traces the fault lines of de-risking without detachment. Europe's anti-coercion instrument gathers dust, Australia's rare earth investments lag years behind need, and China's processing monopoly—90 percent of the chain—endures. Tariffs on electric vehicles might coax concessions, but Beijing's self-sufficiency in mid-tier chips diminishes urgency. For industries tethered to these flows, the imperative lies in measured fortification: stress-testing networks, fostering multi-vendor ecosystems, and cultivating transparency that outpaces turmoil. As Dongguan's workers, once steadfast through plagues, now contend with uncertainty, and Hamburg's engineers recalibrate yields, the crisis reminds that silicon's strength resides not in isolation but in deliberate interconnection. In a world where the seizure of one headquarters can ripple through global assembly lines, resilience demands foresight, not reaction— a lesson etched not in code, but in the pauses between production runs.

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