A factory next to a weed-ridden lot in China’s industrial south has become a global choke point for automotive chips, upending a sector that just a few years ago swore it wouldn’t be caught again by supply-chain disruptions. Automakers vowed to strengthen supply lines after COVID-19 snarled semiconductor output in 2020 and a Japanese factory fire aggravated the shortage a year later. But the crisis engulfing Dutch chipmaker Nexperia’s plant exposed a blind spot: The industry never envisioned low-tech chips would become a lever for China against the West.
“No one prepared for geopolitical disruption, and they’re still not prepared,” said Ambrose Conroy, CEO of U.S. firm Seraph Consulting, which advises automakers. The Dutch government took control of Netherlands-based Nexperia in late September, citing concerns its technology could be passed on to Chinese owner Wingtech. Beijing retaliated by halting exports of finished Nexperia chips packaged at the plant in the Pearl River Delta.
The Netherlands last week reversed course from its decision to take control of Nexperia, signalling a potential breakthrough. From its Dongguan factory, Nexperia ships semiconductors used in everything from car brakes to electric windows. They sell for fractions of a penny each, yet the shortage forced Nissan and Honda to cut production and drove German supplier Bosch to curtail factory working hours.
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