Nexperia Fallout: Volkswagen warns of production risks after Dutch seizure of Chinese chipmaker disrupts Europe’s supply chain

Just a week after the Dutch government seized control of Chinese-owned chipmaker Nexperia, the shockwaves are beginning to hit Europe’s manufacturing sector. German auto giant Volkswagen is now warning of potential production disruptions as China responds with new export restrictions on Nexperia-made semiconductors.

The move has triggered growing concern across Europe’s auto industry, which relies heavily on steady chip supplies. Earlier this week, the German Association of the Automotive Industry (VDA), the country’s main car lobby, said the dispute between China and the Netherlands over Nexperia could lead to “significant production restrictions in the near future” if the supply issue isn’t resolved quickly.

A Volkswagen spokesperson told CNBC that while Nexperia doesn’t supply the automaker directly, its chips are used in several vehicle components provided by Volkswagen’s suppliers.

“We are in close contact with all relevant stakeholders in light of the current situation to identify potential risks at an early stage and to be able to make decisions regarding any necessary measures,” the spokesperson said, adding that production remains unaffected for now.

They added, “However, given the evolving circumstances, short-term effects on production cannot be ruled out.” Shares of Volkswagen fell about 2% in afternoon trading in London.

The warning highlights how geopolitical decisions are increasingly shaping industrial output. Last month, the Dutch government made an extraordinary move by taking control of Nexperia—a subsidiary of China’s Wingtech Technology—citing national security concerns and the need to safeguard access to critical chips. The decision, announced by the Dutch Minister of Economic Affairs, invoked the rarely used “Goods Availability Act,” a measure typically reserved for emergencies affecting national supply.

By seizing control, the Netherlands aimed to prevent Nexperia’s technology “from becoming unavailable in an emergency.” But the fallout came swiftly. China retaliated by blocking exports of the company’s finished semiconductor products, cutting off a vital flow of components to Europe’s auto and electronics sectors.

Nexperia, based in Nijmegen, specializes in producing high-volume, low-cost chips used in a wide range of applications, from car electronics to smartphones. Its products are embedded deep in supply chains—making even indirect disruptions difficult for manufacturers to avoid.

A spokesperson for Germany’s Economy Ministry told Reuters the government is monitoring the situation closely, calling it a “concern for supply chain stability.”

For Volkswagen and other automakers, this may be a preview of a broader challenge: Europe’s growing dependence on foreign chip production. As governments tighten controls and assert sovereignty over semiconductor assets, companies that once took supply security for granted are now forced to plan for a world where every chip has geopolitical weight.

Nexperia, headquartered in Nijmegen, produces billions of semiconductors annually for cars, smartphones, and industrial equipment. Its chips are vital to Europe’s supply chain, and its ownership has been a lingering concern among Western governments since Wingtech acquired the startup in 2019.