Does China have an alternative source to Nexperia's chips?
Yes, China has alternative sources for its chip needs, though switching away from Nexperia could cause short-term production disruptions for some companies.
Nexperia's clients are expected to shift to other power-chip makers like Infineon Technologies, On Semiconductor, STMicroelectronics, and Rohm Semiconductor, which are already used in many products and have completed the necessary automotive certifications.
Chinese companies are also working to boost their domestic chip production to reduce reliance on foreign sources like Taiwan's TSMC.
Alternative suppliers
Companies like Infineon Technologies, On Semiconductor, STMicroelectronics, and Rohm Semiconductor have chips that can replace Nexperia's in automotive applications, though the transition may take several months.
Other companies, such as Alpha and Omega Semiconductor, Panjit, Yuanjie, MCC, and UTC, also offer alternatives for certain Nexperia parts.
China's domestic industry
China is pushing for greater self-sufficiency in chip production to move away from reliance on foreign suppliers, such as Taiwan Semiconductor Manufacturing Company (TSMC).
Domestic companies are developing and manufacturing their own chips, like Alibaba's new AI chip, to fill domestic needs.
Advanced research is ongoing, such as the 1nm RISC-V chip developed at Fudan University, though this is still in the research phase.
Potential challenges
Carmakers and suppliers may face production disruptions if they relied heavily on Nexperia for specific components and cannot quickly secure certified alternatives.
The process of qualifying new chips and transitioning production lines can take months, even if alternative parts are readily available.
“The auto industry is digesting a new and potentially damaging supply-chain disruption from an unlikely source: a small Dutch semiconductor manufacturer with an outsize influence on how cars and trucks are made.
Nexperia notified customers last week that it was stopping shipments of parts, people familiar with the matter said. The company's chips are used in everything from lights to electronics.
The move came after the Dutch government wrested control of the company from its Chinese owner.
Nexperia declared the situation a "force majeure" event, the people say, citing a provision that generally can excuse companies from contractual obligations when facing an extraordinary situation.
While Nexperia is a small player in the automotive chip market overall, it is the market leader for a basic category of chips mainly consisting of transistors and diodes, said Ian Riches, a vice president at TechInsights, a chip data and intelligence provider. In that category, Nexperia has about a 40% market share, he added.
"They go into everything and anything," Riches said. "If you're building a complicated product, it only takes a shortage of one basic component to stop the whole thing."
Nexperia, whose parts end up in cars from BMW, Toyota and Mercedes-Benz, produces high volumes of semiconductors and basic transistors that are used in vehicle systems, including electronic control units. Car companies and parts makers are racing to understand their exposure and find alternative sources of chips, saying that if Nexperia can't ship then vehicle production could be affected in the next few weeks.
General Motors in recent days sent a survey to its suppliers asking whether they buy chips from Nexperia and how many, people familiar with the situation said.
Volkswagen, BMW, Mercedes-Benz and Stellantis, which makes brands including Jeep, Ram and Peugeot, said they are talking with suppliers and assessing potential impacts.
The situation is the latest supply-chain disturbance to hit global automakers. This year there were production stoppages resulting from China's stranglehold on rare-earth magnets, a disruption in aluminum supplies after a fire and President Trump's costly tariffs.
Automakers have been monitoring a parallel threat in recent days over China's rare-earth minerals, after the country tightened exports and increased tension with the U.S. Toyota heard last week from some suppliers that Chinese facilities were unable to ship products, a person familiar with the situation said. Toyota initially thought the delay was related to China's limits on rare-earth minerals but later found out it was tied to the Nexperia situation, the person said. Toyota is actively assessing the situation and studying alternative sources of supply, the company said.
The extraordinary dispute over Nexperia resulted from the Dutch government's decision late last month to seize control of it from China's Wingtech Technology, which is on a U.S. trade blacklist, citing a need to keep Europe from losing "technological knowledge and capabilities" necessary for its economic security.
In early October, the Chinese government ordered Wingtech to suspend Nexperia's exports from China, where 80% of its products are processed before being delivered to customers.
Shipments have yet to resume from Nexperia's factories in Europe and China, the people say.
A Nexperia spokesman referred to an earlier statement that said it is "positive" that day-to-day operations can continue.
Wingtech is "actively communicating with suppliers and customers to sustain the basic stability of workforce, production systems and distribution channels," according to an email the company sent to investors on Thursday that was reviewed by The Wall Street Journal.
"Our expert teams are in close contact with suppliers, sub-suppliers, and customers during global market or supplier bottlenecks to avoid or minimize possible impacts," said a spokesman for Bosch, one of the biggest auto suppliers in the world. Nexperia supplies Bosch with electronic components, he said.
Car manufacturers and suppliers this week asked Chinese authorities to lift their restrictions on Nexperia exports from China and help de-escalate the disputes with the Dutch side, according to people familiar with the situation. The companies in the request included automakers Volkswagen and BMW, as well as suppliers Bosch and Aumovio, one of the people said.
The auto industry is only a few years removed from a semiconductor crisis that dramatically affected production and left dealers with a shortage of new cars to sell.
Many suppliers have adjusted and diversified their production since then. Nexperia has been sending most chips made at factories in Europe to facilities in China for packaging and testing before shipments go out to customers, leaving it exposed to significant disruptions, some of the people said.” [1]
1. Shortage Of Chips Concerns The Auto Industry. Felton, Ryan; Huang, Raffaele; Wilmot, Stephen. Wall Street Journal, Eastern edition; New York, N.Y.. 17 Oct 2025: B1.
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