China has announced it will exempt some Nexperia chips from an export ban imposed after a dispute with the Netherlands, easing concerns over potential disruptions to European car production. This move follows high-level diplomatic talks and aims to stabilize global supply chains amid rising tensions.
In late September, the Netherlands invoked a Cold War-era law to take control of Nexperia, a Chinese-owned semiconductor company based in the country, citing serious governance shortcomings and the need to secure chip supplies in emergencies. Dutch authorities argued that the takeover was necessary to prevent chips from becoming unavailable during crises, a move that Beijing strongly opposed. This intervention led to immediate friction, with China accusing the Netherlands of improper interference in corporate affairs. The situation escalated as European businesses, particularly in the automotive sector, grew anxious about the implications for their operations.
In response, China imposed a ban on re-exporting Nexperia chips to Europe, which raised alarms across the continent. The European Automobile Manufacturers’ Association (ACEA) warned that chip supplies would last only a few weeks, threatening production stoppages if the ban remained in place. Carmakers and parts suppliers emphasized that without these components, they could not build essential parts for vehicles, potentially halting assembly lines. The ban highlighted the fragility of just-in-time supply chains and the critical role of semiconductors in modern manufacturing.
On Saturday, China’s commerce ministry stated it would “comprehensively consider the actual situation of enterprises and grant exemptions to exports that meet the criteria,” though it did not specify the exact conditions. This announcement came after a meeting between Chinese President Xi Jinping and U.S. President Donald Trump in South Korea, where chip exports were reportedly discussed as part of broader trade negotiations. The White House is expected to release details on a new trade agreement with China, which may include provisions for resuming Nexperia shipments, indicating a coordinated effort to de-escalate tensions.
Nexperia, owned by Chinese-backed Wingtech, produces relatively simple but essential semiconductors like diodes, voltage regulators, and transistors, which are widely used in cars, industrial components, and consumer electronics. The chips are manufactured in Europe, sent to China for finishing, and then re-exported, with about 70% of Dutch-made chips undergoing this process. This supply chain model has made Nexperia a key player, supplying nearly half of the electronic components for the European automotive industry, according to reports from German financial daily Handelsblatt.
The initial export ban had sparked fears of widespread supply chain chaos, as automakers rely on these chips for everything from engine control units to infotainment systems. ACEA reiterated that production stoppages could have ripple effects across the economy, affecting jobs and consumer prices. While some industry experts, such as French parts maker OPmobility, noted that the chips are not technologically unique and could be substituted, the approval process for new suppliers is time-consuming, making immediate alternatives impractical. This underscored the strategic importance of maintaining stable chip flows.
China criticized the Dutch government for “improper interference in the internal affairs of enterprises” and blamed it for the current disruption in global production and supply chains. The exemption announcement suggests a pragmatic shift, with Beijing encouraging affected companies to contact authorities for assistance. Simultaneously, EU and Chinese officials met in Brussels to discuss the Nexperia issue, reflecting broader efforts to address trade frictions. These diplomatic engagements highlight the complex interplay between national security concerns and economic interdependence in global trade.
Looking ahead, the resumption of chip shipments could help stabilize European production lines, but the episode serves as a reminder of the vulnerabilities in global supply chains. Ongoing discussions between the EU, China, and the U.S. will be crucial to prevent future conflicts, as all parties seek to balance security interests with economic cooperation. The outcome may influence future policies on technology exports and foreign investments, shaping the landscape of international trade for years to come.