© jackpress / Shutterstock
For several years, the global electronics industry has been sailing through stormy waters. From the pandemic’s disruption of logistics to geopolitical tensions and export bans, electronic manufacturers have been forced to rethink how they secure one of the most essential building blocks of modern technology – semiconductors.
Now, the ongoing Nexperia supply chain crisis has once again put the spotlight on the fragile nature of chip supply. What began as a dispute in the Netherlands has spiralled into a global issue, threatening to bring assembly lines to a halt. For many in the automotive world, this latest chapter feels like another wave in the long-running chip shortage saga.
Understanding the Nexperia supply chain crisis
In late 2024, the Dutch government used a Cold War-era law to take control of Nexperia, a Netherlands-based electronics manufacturer owned by the Chinese company Wingtech. Officials cited “serious governance shortcomings” and concerns that the company’s operations were being compromised in a way that could endanger the availability of critical chips in Europe.
For context, Nexperia is a vital player in the European semiconductor ecosystem. Its chips power countless components across the automotive industry, from airbags and lighting systems to advanced driver assistance technologies. Around 70% of Nexperia’s European-made products are sent to China for final processing before being re-exported to Europe and beyond.
When the Dutch government stepped in, Beijing retaliated by imposing an export ban on chips produced in China. Overnight, European car makers like Volkswagen, BMW and Mercedes-Benz faced renewed uncertainty. Without access to these critical semiconductors, production schedules wobbled, and suppliers began warning that inventories could run dry within weeks.
Timeline of a crisis
The situation escalated quickly. In September 2024, the Netherlands took control of Nexperia, and the following month, company CEO and founder Zhang Xuezheng was suspended by a Dutch court, deepening tensions between the company’s Dutch and Chinese operations. Consequently, China imposed its export ban – and by November 2024, European automakers were already warning of potential temporary shutdowns as their chip supplies dwindled. Finally, in early 2025, Beijing began to soften its stance, signalling it would grant exemptions to certain companies to allow limited exports to resume.
This series of events has left contract electronics manufacturers UK-wide and across Europe facing challenges to maintain continuity. The message is clear: supply chains built on global dependencies are increasingly vulnerable to political and regulatory shocks.
Ripple effect across the automotive industry
The European automotive sector has become heavily reliant on semiconductors, not just for luxury features, but for the fundamental vehicle operation. Even basic models now contain thousands of chips – sensors, microcontrollers and processors that make modern cars safer, more efficient and connected.
When one link in the chain breaks, the consequences ripple far and wide. The Nexperia disruption has already affected suppliers who produce everything from braking systems to in-car entertainment units. The shortage isn’t just about production delays, it’s about maintaining consumer trust, meeting emission targets and fulfilling orders in a market where demand remains strong.
The problem doesn’t stop at the factory gate. Logistics, warranty services and aftermarket parts all depend on a steady flow of electronic components. When supply dries up, the entire ecosystem feels the impact.
The panic buying phenomenon
One of the most damaging side effects of any semiconductor crisis is panic buying. In an effort to secure stock, some manufacturers double or triple their orders, fearing future shortages. This behaviour inflates demand beyond actual requirements, sending misleading signals up the supply chain and worsening the very problem everyone is trying to solve.
As a result, even well-prepared electronic manufacturers can find themselves outbid, or unable to access critical parts. Prices spike, lead times stretch and trust between partners erodes. The smarter strategy is to resist the panic. Businesses should focus on real needs and strengthen relationships with trusted suppliers, rather than joining the speculative frenzy.
How automotive manufacturers can respond
The Nexperia crisis is a wake-up call for every electronics manufacturer and automotive producer in Europe. It’s time to move from reactive to proactive supply chain management.
One approach is partnering with reliable, locally based contract electronics manufacturers: UK firms that can provide not just manufacturing expertise, but also supply chain resilience. Companies like Sellectronics exemplify this model. Founded in 2008, we have built our reputation on long-term partnerships, innovation and rigorous quality standards.
With certifications including AS9100D and ISO 9001, Sellectronics operates at the same level of precision demanded by aerospace clients, which translates into automotive-grade reliability. Our focus on supply chain management, rapid prototyping and full turnkey assembly means clients can count on stable, high-quality components, even in turbulent times.
By working with reliable contract electronics manufacturers, automotive companies can mitigate the impact of global disruptions. Instead of waiting for international politics to settle, they can shorten their supply lines, improve transparency and keep production moving.
Nexperia’s response: shifting production and strategy
Despite the turmoil, Nexperia is working to stabilise its operations. The company announced it would stop sending semiconductor wafers to China for processing and instead develop alternative solutions to ensure supply continuity. However, transitioning away from China won’t happen overnight. The infrastructure, cost and technical expertise required for large-scale semiconductor packaging are immense.
Nexperia’s pivot signals a broader trend: the return of chip manufacturing closer to home, where it’s less vulnerable to cross-border politics. For automakers, this could ultimately lead to a more secure supply base.
Looking to the future
The past few years have proved that semiconductor shortages aren’t one-off events; they’re symptoms of an interconnected, and sometimes fragile global system. The Nexperia case underlines the importance of diversification, transparency and collaboration across the entire electronics supply chain.
To prepare for future disruptions, businesses should start by knowing exactly where every critical component originates, how it’s processed and where potential bottlenecks lie. This could make all the difference when the next crisis hits. Building stronger ties with UK-based contract electronics manufacturers can provide a safety net, ensuring key parts remain available, even when international tensions flare.
Equally important is investing in digital tools for supply chain visibility. Real-time tracking, predictive analytics and better communication between OEMs and suppliers can turn uncertainty into actionable intelligence. Working closely with trusted partners like Sellectronics, who understand the intricacies of electronics manufacturing and the value of dependable supply, can help businesses not only survive the current storm, but come out stronger on the other side.