A factory in China's industrial south has emerged as a global choke point for automotive chips, disrupting an industry that vowed to avoid supply-chain issues after COVID-19. The Dutch government's takeover of Nexperia prompted Chinese retaliation with export halts. Last week, the Netherlands reversed its decision, signaling potential relief.
The automotive sector promised to fortify supply chains after COVID-19 disrupted semiconductor production in 2020 and a Japanese factory fire worsened shortages in 2021. Yet, the crisis at Dutch chipmaker Nexperia's plant in China's Dongguan exposed an overlooked vulnerability: low-tech chips as a tool in China's tensions with the West. From this Pearl River Delta facility, Nexperia ships semiconductors essential for car brakes and electric windows, priced at mere fractions of a penny each.
In late September, the Dutch government seized control of Netherlands-based Nexperia over fears its technology could reach Chinese owner Wingtech. Beijing responded by blocking exports of chips packaged at the site. "No one prepared for geopolitical disruption, and they're still not prepared," said Ambrose Conroy, CEO of U.S. firm Seraph Consulting, which advises automakers.
The shortage compelled Nissan and Honda to slash output, while German supplier Bosch reduced factory hours. Last week, the Netherlands backed away from its takeover, hinting at a possible resolution. This episode underscores persistent risks in global chip dependencies.