Nexperia Saga Exposes Europe’s Loosening Grip on Chip Supply Chain

The Nexperia saga, which has created a global car chip shortage, reveals a new reality: Europe’s once-vaunted neutrality and industrial sovereignty are eroding, while China's foundational role in manufacturing has become too large to fail and too complex to legally unwind, the South China Morning Post (SCMP) reported.

Nexperia's Chinese facility had relied on wafers from its fabrication plants in the United Kingdom and Germany. (Photo: Nexperia Facebook)

For nearly a month, parts of Nexperia's Dongguan production lines have sat idle.

Two factory workers said this week that some machinery had been turned off due to a wafer shortage since late last month, with one estimating that a third of the machines were idled — echoing earlier reports by the SCMP.

Wafers, which are cut into dies, are the core materials in assembling integrated circuits used in computing, communications, and power switch applications.

Nexperia's Chinese facility had relied on wafers from its fabrication plants in the United Kingdom and Germany, but those shipments were abruptly halted as the Dutch-based company grappled with an internal conflict.

Nexperia's Chinese management refused to comply with directives from its head office and planned to switch to local wafer suppliers, a transition that could take at least six months.

The Dutch headquarters warned clients that products from the Chinese facility may be substandard.

Experts said Chinese fabs might be ready to supply the wafers needed by Nexperia's local facility.

"Chinese wafer fabs possess the technical capability to fulfil Nexperia's orders," said Arisa Liu, chief director and research fellow at Taiwan Industry Economics Services, a databank of the Taiwan Institute of Economic Research.

However, it would take time to "gain widespread acceptance from Nexperia's overseas clients," who would have to "go through stringent automotive certification processes, overcome historical trust barriers, and current geopolitical uncertainties," she added.