Should Manufacturers Rejoice After Nexperia Breakthrough?

China is lifting export controls on semiconductors produced by Nexperia, a Chinese-owned firm, granting exemptions for civilian applications.

The move comes as a relief to European manufacturers, particularly in the automotive sector, which had raised alarms about imminent shortages and production halts. This development forms part of a wider easing of trade restrictions from Beijing.

The components at the centre of the issue are from Nexperia, a Dutch semiconductor specialist owned by China’s Wingtech. Although simple and low-cost, they are fundamental to modern vehicle electronics. About 70% of the chips Nexperia produces are finished in China before being exported globally.

A decision by the Dutch government to take control of the firm, citing “serious governance shortcomings”, prompted a swift response from Beijing, which blocked exports. The European Automobile Manufacturers’ Association (ACEA) warned at the time that existing stockpiles would only last a matter of weeks.

Geopolitical ripples and component flows

The export block had an immediate effect, with automakers warning that a restricted chip supply could lead to temporary production stops.

In response to this industrial pressure, China’s commerce ministry confirmed it would exempt Nexperia chips for civilian use, which removes the licensing requirement.

EU Trade Commissioner Maros Sefcovic stated the country has agreed to "the further simplification of export procedures for Nexperia chips".

He adds that discussions are ongoing to create a "lasting, stable, predictable framework". In its announcement, China’s ministry also criticised the Dutch government's intervention and called on the EU to urge the Netherlands to correct its "erroneous practices".

The Nexperia decision is part of a broader de-escalation in trade tensions. China has also suspended export bans on key semiconductor materials such as gallium and germanium until November 2026.

Professor David Bailey from the University of Birmingham calls the situation "a wake-up call" for the car industry.

"The Dutch government may well have had good reasons to take control, but it hadn't thought through the implications," he explains. "The retaliation from China was swift and brutal."

He also urges manufacturers to prepare for future disruptions, advising: "There’s a need to find alternative processing sites... and keep bigger stocks of products."

Building a resilient manufacturing supply chain

For some manufacturers, the event has reinforced lessons learned from previous crises.

Nicolai Martin, Member of the Board of Management for Purchasing and Supplier Network at BMW, confirmed that, while the firm does not buy chips directly from Nexperia, the components are embedded in parts from its suppliers.

“They are small and cheap parts, but with a relevant impact spread over the whole vehicle,” he says. “Our production still runs as planned, but we are in a volatile situation. That can change.”

Nicolai explained that BMW used processes developed during the earlier chip crisis to gain rapid transparency: “We had transparency on this topic in a few hours."

However, he admits previous lessons were focused on complex chips and overlooked the risks associated with these "super small and mass product parts".

This incident serves as a warning for global manufacturing beyond the automotive sector.

Sapna Amlani, Supply Chain Director at Moody’s, explains: "The Nexperia case isn’t just a governance dispute – it’s a warning shot for global supply chains."

The disruption, she notes, affected basic components that are foundational to countless industries.

“When they stop flowing, industries stall,” she adds. Her advice to leaders is to focus on multi-sourcing scenario planning and improving real-time visibility.

“Supply chains are moving from efficiency-driven to resilience-driven,” she says. "Companies that act now – diversifying, digitising and stress-testing their networks – will be better positioned when the next geopolitical fault line emerges.”