• A dispute between Nexperia’s EU and China units has slowed chip shipments and raised shortages.
• After the Dutch action, some customers now buy wafers in Europe and ship them to China themselves.

Customers of Nexperia are working with the company on a temporary way to get around the widening dispute between its European operation and its packaging plant in China, two people familiar with the matter told Reuters.

This workaround comes at a time when Nexperia is already under pressure. In late September, the Dutch government used an emergency law from the Cold War era to take temporary control of the company. Officials said they saw serious problems in how the business was being run and believed there were risks to national and economic security. The measure can stay in place for up to a year, though the government says it has not taken legal ownership of the firm.

China reacted sharply to the move. It stopped exports of Nexperia chips from China to Europe and blocked shipments of some materials needed to make chips. That disruption exposed how dependent the auto industry is on Nexperia’s “legacy” chips, which handle basic but essential tasks in most vehicles. About 70–80% of the company’s production is processed in China before being shipped out, which leaves European carmakers especially vulnerable.

The case has added to broader tension between the United States and China. Nexperia’s parent company, Wingtech, is partly state-owned and had already been placed on a US watchlist. Dutch court papers show that US officials had raised concerns earlier in the year about the company’s leadership in China. The Dutch government denies acting under pressure from any other country, but says it had evidence that some production capacity and intellectual property were being shifted to China.

Car manufacturers and suppliers now face a difficult phase. Switching to a new chip supplier can take time, cost money, and require changes to existing designs. Experts say this is a clear example of what happens when economic ties between China and the West start to pull apart.

The timing is also delicate. The US and China recently agreed to a one-year trade truce to calm tensions, but the Nexperia dispute shows how fragile that calm may be. EU officials were reportedly not aware that the Dutch government planned to take control of the company and are now trying to repair the flow of chips and rare earth materials with China.

A short-term fix, not a full answer

The workaround that customers are exploring is meant only to ease the immediate pressure. It is not a long-term solution, and smaller clients would struggle to use it.

The supply problem began when Nexperia Europe stopped sending wafers to its Dongguan plant after the leadership standoff, which stemmed from the government action. Nexperia normally makes wafers in Europe and sends them to China for packaging. With that link frozen, customers and suppliers have had to look for other options.

Some clients are now working with Nexperia Europe to buy wafers directly from its Hamburg factory. They then move the wafers to China on their own and work with the Dongguan plant to finish the chips, the two sources said. This approach treats the company almost as if it were two separate businesses. It keeps both sides paid for their work and may help manage concerns about product quality.

Reuters has not confirmed which companies are taking part or whether any have begun using the method. Nexperia chips are used by several auto firms and suppliers, including Volkswagen, Hella, Bosch, Aumovio, and Honda.

A Nexperia spokesperson said the company was trying to support customers “in every way it could,” but did not comment on the workaround. A Wingtech spokesperson declined to comment.

China offered some relief this week by easing export limits on chips from the Dongguan plant, and a Dutch delegation is expected to travel to China next week for more talks.

Nexperia’s European arm stopped sending wafers to China on October 26, saying it had not been paid. The Dongguan plant is now selling chips from its existing stockpile, though it is unclear how long those supplies will last.

“A lot of companies are currently negotiating and some already are buying wafers from Nexperia EU and providing them to Nexperia China to get exclusive production for themselves,” said one of the sources, a distributor of Nexperia products.

The second source said larger customers see the plan as a “short-term patch” while they consider other paths.

Other options include replacing Nexperia chips with similar parts from companies like Onsemi and STMicroelectronics.

In the longer run, Nexperia’s European arm is exploring packaging expansion in Malaysia and the Philippines. The Chinese arm is looking into using wafers made in China, reducing its need for European supply.

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