German carmakers caught in crossfire over Dutch-Chinese semiconductor feud

After the Dutch government’s extraordinary decision to take control of Chinese-owned Nexperia to secure Europe’s chip supply, several German carmakers are now warning of potential short-term production disruptions.

One of them is the automotive giant Volkswagen, which said it could not rule out “temporary production restrictions” due to issues affecting the Dutch chipmaker, as reported by German media outlet ZDF.

“Currently, production is unaffected. However, given the dynamic situation, short-term impacts on production cannot be ruled out,” read an internal company message seen by the DPA news agency and confirmed to them by a company spokesperson.

According to the German Bild, Volkswagen is already in talks with Germany’s Federal Employment Agency about possible short-time work arrangements for tens of thousands of employees. The company’s internal network reportedly stated: “Volkswagen is in close contact with all relevant stakeholders in light of the current situation to identify potential risks at an early stage and decide on any necessary measures.”

The German Association of the Automotive Industry (VDA), the country’s main car industry lobby, also warned of future delays, saying that the China-Netherlands dispute over Nexperia could lead to “significant production restrictions in the near future” if the supply interruption of chips cannot be swiftly resolved.

Nexperia holds a 40 percent share of the global market for basic semiconductors such as diodes and transistors, and also develops advanced chips for battery management systems. Its Chinese parent company, Wingtech, has been on a US government blacklist since 2024 over alleged national security risks. Supply issues emerged after the Dutch government assumed control of the company, which the Chinese parent firm had previously managed. In response, China halted exports of Nexperia products, including chips destined for the automotive industry.

Germany’s Interior Ministry said it had “no information at this time” suggesting that Nexperia had produced Chinese-made chips of inferior quality or with espionage-related elements.

It appears that the US administration applied pressure on the Dutch government to seize control of Nexperia, according to an article by Politico, as part of Washington’s ongoing trade dispute with China. This was made possible under a rarely used Dutch law designed to prevent the outflow of strategic technology. The Chinese CEO was subsequently removed from his position.

By Nazrin Sadigova