Nexperia halts wafer shipments to China factory, triggering supply shock for automakers

Nexperia has stopped shipments of wafers to its major facility in Dongguan, China, setting off a supply shock that is now hitting European automakers. The company informed customers that it could no longer continue deliveries to the site after disputes with the local management there.

This Dongguan factory is one of the largest assembly and testing facilities in the world, and before the dispute, it handled about half of Nexperia’s total production volume. Cutting it off means the supply chain serving automakers is being squeezed at the worst possible time.

A Nexperia spokesperson allegedly told Bloomberg that:-

“We have maintained shipments for as long as commercially feasible, yet continuing the current flow of supply to the site in Dongguan is no longer justifiable.”

Nexperia claims the decision is tied to contractual problems with the local site managers, but the situation is larger than an internal disagreement.

The Dutch caretaker government took veto powers over Nexperia in late September, citing concerns that the company’s Chinese owner, Wingtech Technology, was interfering with operations in ways that threatened business stability.

Internal power struggle triggers supply chain pressure

The Ministry of Economic Affairs in the Netherlands said that actions taken by Wingtech founder Zhang Xuezheng posed a direct threat to Nexperia’s viability, including the security of manufacturing capacity and intellectual property.

An Amsterdam court suspended Zhang as CEO on October 7 after a petition from Nexperia’s own management, but Wingtech has rejected the accusations and demanded Zhang’s reinstatement.

The company insisted it was not engaged in any form of technology theft and argued that the dispute was being exploited.

“It is difficult to escape the conclusion that they have identified Zhang as a soft target whose removal could be publicized as a win,” said WingTech, adding that restoring full control was necessary to stabilize operations.

The Dutch ministry pushed back, saying, “The actions of the CEO posed an acute threat to the continuity of production capacity, knowledge, and intellectual property,” and also referenced misuse of financial resources tied to Zhang’s other businesses in China.

The ministry also clarified that it did not directly suspend Zhang; his removal came from an independent inquiry by the Enterprise Chamber of the Amsterdam Court of Appeal.

Automakers and suppliers feel the squeeze

The supply disruption is already affecting Volkswagen, BMW, Mercedes-Benz, Stellantis, and Ford, as many rely on ZF Friedrichshafen AG, a key automotive supplier that depends on Nexperia’s components.

According to Bloomberg, people familiar with ZF’s operations said the supplier has reduced shifts at its electric drivetrain plant in Schweinfurt, Germany, because components tied to Nexperia’s production are now scarce. ZF has not commented publicly on the situation.

Complicating matters, Beijing responded to the Dutch veto powers by blocking exports of chips produced at the Dongguan site. So even when wafers reached the plant, the chips could not leave China.

This left European automakers short on inexpensive transistors and logic chips, which are small but essential for everything from engine control systems to power steering units.

Nexperia produces these components at high volume, with fabrication plants in Germany and the UK, and additional testing and assembly sites in the Philippines and Malaysia, but none match the output scale of the Dongguan facility.

Nexperia said it notified customers because “local management has not been honoring the agreed contractual arrangements.” The company added that “Shipments will be resumed once all contractual obligations are fully satisfied once again.”

Executives across the automotive sector say the only realistic short‑term solution is a temporary agreement to allow exports while broader negotiations continue. The longer it drags, the greater the risk of assembly lines slowing down or shutting down.

No one here is compromising. And the supply chain is paying for it.

Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.