The European Union is urgently engaged in diplomatic talks to resolve the escalating semiconductor shortage triggered by a geopolitical spat between the Netherlands and China involving chipmaker Nexperia. The crisis, which has already forced major automakers like Honda and Nissan to cut production, risks halting assembly lines worldwide within days due to the lack of essential “legacy” chips used in vehicle electronics.
EU tech chief Henna Virkkunen recently met with Nexperia representatives to discuss short- and medium-term measures aimed at strengthening supply chain resilience. Meanwhile, European automakers brace for immediate disruptions, with the European Automobile Manufacturers’ Association warning of imminent assembly line stoppages. Car giants including Mercedes-Benz and Volkswagen acknowledge the critical need for Nexperia chips to meet production and financial targets.
The shortage stems from Dutch government actions in late September to take over Nexperia, citing governance concerns about potential technology transfers to China, the parent company’s home base. In retaliation, China blocked exports of Nexperia factory output from its territory, where around 80% of the chips are manufactured. This move has led to skyrocketing chip prices and forced some automakers, notably Honda and Nissan, to slash vehicle output substantially.
These basic but vital semiconductor components, which represent roughly 60% of Nexperia’s automotive chip supply, control vehicle electrical systems such as lighting and power management. Alternative suppliers exist but cannot fill the gap in the short term, meaning the automotive industry may face production halts imminently unless a diplomatic resolution is quickly reached.
Stellantis has set up a crisis “war room” to monitor the situation, and suppliers like Bosch have warned of potential workforce reductions if the dispute persists. Industry experts emphasize the urgency of negotiations to prevent long-term disruptions across the global auto sector, urging all stakeholders to accelerate diplomatic efforts to defuse the crisis and restore chip flows.
