Imagine this: you’re running a multi-billion euro chip company, and suddenly the only way to talk to your own factory is through an open letter on the internet. That’s not some dystopian movie plot – that’s Nexperia right now.
Last Thursday, the Dutch arm of the semiconductor giant did something I’ve never seen in twenty years of watching tech and geopolitics: they published a public plea to their own Chinese operations. Not a press release, not a diplomatic back-channel message – an actual open letter begging for the resumption of component shipments. When a company has to go cap-in-hand to its own subsidiary in public, you know things have gone seriously sideways.
A Supply Chain Held Hostage by Geopolitics
These aren’t the flashy AI chips that make headlines. Nexperia makes what the industry calls foundation semiconductors – the unglamorous but absolutely essential transistors, diodes, and power management chips that make literally everything electrical work. Your car’s electric windows? Nexperia. The sensor that tells your ABS system you’re sliding on ice? Nexperia. The little chip that connects your EV battery to its motors? You guessed it.
Here’s the catch: these chips start life in European fabs, get shipped to China for assembly and testing, then come back to customers worldwide. It’s been working smoothly for years. Until it suddenly wasn’t.
How a Cold War Law Broke a Modern Supply Chain
Everything changed in September when the Dutch government pulled out a legislative relic I didn’t even know still existed – a Cold War-era law that lets them essentially seize control of companies for national security reasons.
The target? Nexperia, owned by Chinese tech conglomerate Wingtech since 2021. The trigger? Pressure from Washington, who apparently weren’t thrilled about critical semiconductor technology being under Chinese ownership, even if the actual cutting-edge work happens in Europe.
The Dutch move was extraordinary – we’re talking about a Western government effectively nationalising (temporarily) a private company because of its owner’s passport. Beijing’s response was equally extraordinary, but far more effective: they simply stopped letting finished chips leave Chinese factories.
“Customers across industries are still reporting imminent production stoppages. This situation cannot persist.”
– Nexperia’s Dutch management, in their open letter
The False Dawn of Resolution
For a brief moment last week, it looked like cooler heads had prevailed. The Dutch government announced they were suspending their intervention after “constructive talks” with Chinese authorities. Industry insiders breathed a sigh of relief. Problem solved, right?
Wrong.
The chips still aren’t moving. Not the finished products, and critically, not the wafers that European plants need to send to China for assembly. The supply chain remains frozen, and the silence from the Chinese side has been deafening – hence the extraordinary public letter.
Car Makers Running on Fumes
The impact is already spreading like wildfire through the automotive industry. Major manufacturers have started sending those dreaded letters to suppliers – the ones that warn of impending production stops.
- German auto giants are warning of “elevated risks” particularly for Q1 2026
- Japanese manufacturers have flagged potential line stops within weeks
- European suppliers are burning through emergency stockpiles built during COVID
- Even Chinese domestic manufacturers may start feeling pinch as European wafer supplies dry up
This isn’t theoretical. These are the same companies that learned brutal lessons during the 2021-2022 chip shortage. They’ve spent years building resilience, diversifying suppliers, holding larger inventories. And now they’re watching those buffers evaporate because of a political dispute.
The Rare Earth Parallel That Should Terrify Everyone
Perhaps the most worrying aspect – and in my view, the part that makes this different from previous trade spats – is how closely this mirrors China’s rare earth strategy.
Remember when China controlled 95% of rare earth elements and could (and did) weaponise that dominance? This feels eerily similar. Europe has the design and front-end manufacturing, China has the assembly and testing capacity, and suddenly neither side can function without the other.
But here’s what keeps me up at night: unlike rare earths, where alternatives eventually emerged after a decade of pain, there are no quick substitutes for Nexperia’s specific portfolio. These chips are designed into products years in advance. You can’t just “swap in” alternatives when they’re controlling airbag deployment or braking systems.
The Human Cost Nobody’s Talking About
While diplomats exchange carefully worded statements and executives publish open letters, real people are starting to feel the squeeze.
I’ve spoken with engineers at European automotive suppliers who are working weekends trying to find alternatives that don’t exist. Production planners who built their 2026 forecasts assuming this would be resolved months ago. Factory workers who survived COVID shutdowns only to face potential layoffs because of a geopolitical chess game.
And on the Chinese side? Thousands of workers at assembly and test facilities who may see their plants go dark because wafers aren’t arriving from Europe. This isn’t some abstract trade dispute – it’s livelihoods hanging in the balance.
What Happens Next?
The honest answer? Nobody knows.
The Dutch intervention has been “suspended” but not permanently lifted. The Chinese export blocks remain in place. Companies are stuck in limbo, unable to plan, unable to commit to customers, unable to give their employees any certainty.
There are whispers of potential solutions – joint ventures, technology transfers, security guarantees – but nothing concrete. And every day that passes burns through inventories and erodes trust.
“The Chinese position appears strong again as European manufacturers are dependent on the supplies.”
– Senior European banking analyst
The Bigger Picture
This isn’t really about Nexperia anymore. It’s about what happens when global supply chains become weapons.
We’ve spent thirty years building the most efficient, interconnected manufacturing system in human history. Just-in-time delivery, specialised facilities scattered across continents, costs driven down to fractions of pennies. It was beautiful in its efficiency.
And now we’re discovering the dark side: when trust breaks down, these marvels of globalisation can become liabilities overnight.
The Nexperia crisis is just the most visible example of a trend that’s been building for years. From COVID exposing medical supply vulnerabilities to Russia’s weaponisation of energy to China’s dominance in battery materials – we’re entering an era where supply chains are strategic assets.
And companies, countries, and workers are all discovering that “efficiency” and “resilience” are sometimes mortal enemies.
The open letter from Nexperia’s Dutch management isn’t just a cry for help. It’s a warning shot. In the new world we’re building, where technology and geopolitics are increasingly the same thing, no company is too big, no supply chain too established, no relationship too profitable to be sacrificed on the altar of national security.
Welcome to the future. It’s going to be a bumpy ride.
