The Netherlands' seizure of Chinese-owned chipmaker Nexperia and Beijing's retaliatory export ban have disrupted global automotive supply chains, threatening production at European automakers and exposing vulnerabilities for Indian component suppliers dependent on these networks.
28 Oct 2025 | 4548 Views | By Shahkar Abidi & Ketan Thakkar
In mid-October, the Netherland government did something rare in Europe’s usually quiet semiconductor world. It seized control of Nexperia, a major European chipmaker owned by China’s Wingtech. The move, framed as a national security measure, aimed to prevent sensitive chip technologies from flowing to China. There were apprehensions within the ...
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In mid-October, the Netherland government did something rare in Europe’s usually quiet semiconductor world. It seized control of Nexperia, a major European chipmaker owned by China’s Wingtech. The move, framed as a national security measure, aimed to prevent sensitive chip technologies from flowing to China. There were apprehensions within the government that the company's former CEO Zhang Xuezheng was reportedly dismantling the company's European operations and moving production to China.
Global newswire Reuters, citing sources reported that Xuezheng, who is also the founder of Nexperia's Chinese parent company Wingtech, had planned to lay off 40% of staff in Europe and close a research and development facility in Munich
Beijing hit back swiftly. China’s Ministry of Commerce blocked exports of critical chip components from Nexperia’s Chinese subsidiaries to Europe and other regions. At first glance, this seemed like another chapter in the West-versus-China tech rivalry. But for the global automotive industry, India’s included, the implications could soon be felt in factories far from Amsterdam or Beijing.
A Small Chip with Big Consequences
Nexperia doesn’t make the high-end processors that power computers or smartphones. Its specialty lies in the unglamorous but indispensable parts such as diodes, transistors, and Metal-Oxide-Semiconductor Field-Effect Transistors , that regulate currents and protect circuits inside vehicles. These components are the unsung heroes keeping functions like battery management, braking systems, and sensor modules working.
S&P Global Mobility estimates that Nexperia accounts for about 5% of the world’s automotive silicon discrete market, with a stronger foothold in Europe. That might sound small, but automakers know from the pandemic-era crisis that even tiny market shares can lock up production lines when supply dries up.
Most of Nexperia’s chips are designed and manufactured in Europe but then shipped to China for final packaging and testing. When Beijing’s export restrictions bit, that finishing stage suddenly froze, choking global supply chains.
Why India Should pay Attention
As per Jay Kale, Elara Securities, for Indian suppliers such as Sona BLW, Endurance Technologies, and Samvardhana Motherson International Limited, the headwinds lie in their deep links with European automakers. These Tier 1 suppliers provide precision parts for Volkswagen, BMW, and Mercedes-Benz; brands which face potential grappling with an emerging shortage of electronic components. Roughly 35% of Samvardhana’s revenue, for instance, comes from German OEMs.
Even Tata Motors, through Jaguar Land Rover, has exposure to these fragile European networks including suppliers and manufacturing plants.
If production slows at Volkswagen’s Wolfsburg or Zwickau plants, which reportedly suspended key model lines in October, the effects could cascade into India’s export-oriented suppliers.
BMW, Mercedes, Audi, and Porsche are also said to be experiencing subcomponent delays, especially for electric vehicles. With crucial product launches looming including BMW’s Neue Klasse, Mercedes-Benz’s next-generation CLA, and Volkswagen’s electric T-Cross; executives are scrambling to find backup suppliers before assembly lines come to a halt.
The Ripple Beyond Europe
The Nexperia shock is reverberating across the Pacific. Industry groups in Japan and the United States are warning members to brace for ripple effects as the same parts appear in consumer electronics, industrial equipment, and Internet-of-Things devices, many of which are directly or indirectly also found in the auto industry.
Hard to Replace, but not Irreplaceable
It is in Dongguan in China, where Nexperia’s largest assembly and test facility operates. Approximately 80% of Nexperia’s total finished product capacity resided in mainland China, with 70% coming from the Dongguan site alone. In addition, mainland China accounted for 48% of Nexperia’s total revenue, highlighting a substantial reliance on domestic production and customer base, a level of dependence that now looks like a strategic vulnerability.
Technically, Nexperia’s parts are not unique. Competitors like Infineon, ON Semiconductor, ROHM, Renesas, and STMicroelectronics produce similar devices. But switching suppliers is not like changing a light bulb. Each new component must undergo lengthy validation and testing, a process that can stretch months in the auto world, where reliability standards are unforgiving.
What Comes Next
For Indian auto suppliers, this episode is a reminder of how exposed the global industry remains, even amid talk of “de-risking” supply chains. Today’s silicon shortage may not cause the sweeping shutdowns seen in 2021, but it underscores a persistent truth: the smallest chips often carry the biggest economic weight.
Manufacturers and policymakers in India may now face renewed pressure to localize production of basic semiconductors. For a nation courting global automakers and EV investments, the Nexperia episode could be the wake-up call that global chip politics no longer happens somewhere else, they happen in everyone’s backyard.