Semiconductor supply chain disruption
China confirms exemptions to export controls following Trump-Xi meeting, allowing flow of Nexperia chips to resume
China has reversed export restrictions on critical automotive semiconductors following a meeting between Donald Trump and Xi Jinping, though European manufacturers remain cautious about the speed and scope of the resumption.
The ministry framed the decision as reflecting China's role as a responsible major power that fully considers the security and stability of domestic and international supply chains, though it simultaneously accused Dutch authorities of creating the current chaos through improper interference in company internal affairs.
This announcement follows US president Donald Trump's meeting with Chinese president Xi Jinping in Busan, South Korea, after which a White House fact sheet claimed China would "take appropriate measures to ensure the resumption of trade from Nexperia’s facilities in China, allowing production of critical legacy chips to flow to the rest of the world”.
The resolution arrives after weeks of mounting alarm within the automotive industry, where manufacturers had warned that existing chip inventories would sustain production for only a matter of weeks. The export ban, imposed by China's Ministry of Commerce in early October following the Dutch government's seizure of Nexperia under emergency powers, had created an acute supply crisis for semiconductors that, whilst technologically mature, remain indispensable to modern vehicle architecture.
German supplier confirms export licence approval
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The practical impact of China's policy reversal became apparent this week when Aumovio, a major German automotive supplier recently spun off from Continental, confirmed it had received an export exemption and resumed shipping Nexperia semiconductors and components containing them. Philipp von Hirschheydt, chief executive officer of the Frankfurt-based company, which employs more than 86,000 people globally, told Bloomberg that Aumovio received its export licence from Beijing earlier this week.
Von Hirschheydt stated that China's Ministry of Commerce lifted the broader Nexperia export ban on November 6, though he cautioned that normalisation would take time. "It will take some time until all processes and procedures are running normally again," he noted. "In the coming four to six weeks, there could still be problems with supply."
Aumovio's successful application provides the first concrete evidence that China's exemption process is functioning, though questions remain about how broadly and swiftly other suppliers will gain access. The company had been among those facing acute pressure on its supply chains, as Nexperia components are embedded within numerous automotive assemblies that Aumovio manufactures for vehicle producers across Europe and beyond.
Implementation challenges remain for European manufacturers
Whilst China's announcement represents a significant de-escalation, European industry groups have responded with measured optimism rather than outright relief. The European Automobile Manufacturers' Association (EAMA), which had warned in October that chip inventories could run out within weeks, acknowledged the development but emphasised that critical uncertainties persist.
"A number of practical questions remain as to how the exemption for export controls will be granted," the association stated. "Until the secure flow of goods begins again, the situation will remain critical."
The association's caution reflects the complexity of unwinding a supply chain disruption that has affected virtually all European vehicle manufacturers and their tier one suppliers. Nexperia produces hundreds of millions of discrete semiconductors, diodes, transistors and MOSFETs annually across facilities in Hamburg, Manchester and Nijmegen, with a combined capacity exceeding 50 billion components. Yet approximately 70% of chips manufactured in the Netherlands are sent to China for packaging and testing before being re-exported to customers globally.
This circular supply chain architecture meant that China's export restrictions created an immediate choke point that could not be easily circumvented. The chips themselves, though technologically mature and relatively inexpensive, perform vital functions in vehicle electrical systems and power management units, from switches and steering wheel controls to braking systems and airbag controllers.
Volkswagen, which established a dedicated task force to investigate how Nexperia components flow through its hundreds of supplier variants, stated it was continuing to assess the situation. BMW, Mercedes-Benz, Stellantis and Renault all indicated they were monitoring developments closely, though none have publicly declared that their supply chains have fully normalised following China's policy shift.
What the truce means for automotive production and supply chains
For automotive manufacturers and their suppliers, the immediate priority is confirming that chip flows resume at sufficient volumes to sustain production schedules. The industry operates on precisely calibrated just-in-time manufacturing systems where shortages of components representing a fraction of total semiconductor content can render entire vehicle architectures inoperable.
Nexperia holds approximately 40% market share in the segment covering transistors and diodes used in automotive applications, according to research firm TechInsights. The company generated $2 billion (£1.54 billion) in sales last year, with roughly 60% of revenue derived from automotive customers. Switching to alternative suppliers requires obtaining new certifications through lengthy homologation processes that cannot be compressed into days or weeks, particularly for components carrying stringent automotive qualification standards such as AEC Q100 and Q101.
The Alliance for Automotive Innovation, representing General Motors, Toyota, Ford, Volkswagen, Hyundai and nearly all major automakers operating in North America, praised the agreement reached between Trump and Xi. "Obviously, a positive resolution to a potentially disruptive situation that should keep US and global automaking on track," the group's chief executive officer, John Bozzella, stated, specifically commending the president and his team for treating the global semiconductor supply chain as both an economic and national security issue.
Yet the crisis has exposed fundamental vulnerabilities within automotive supply chains that extend beyond the immediate Nexperia dispute. The concentration of semiconductor packaging and testing operations in China, combined with the fragmentation of ownership structures across geopolitical fault lines, creates structural risks that cannot be easily mitigated through diplomatic agreements alone.
European policymakers have sought to address these vulnerabilities through initiatives such as the European Chips Act, though a European Court of Auditors report in April cast doubt on the programme's ability to meet its stated objectives. The report projected that Europe would achieve an 11.7% global semiconductor market share by 2030, well short of the 20% target, citing ambitious goals, insufficient funding and intense competition from rival incentive policies in other countries.
The Dutch government's willingness to invoke emergency powers and seize control of a major semiconductor manufacturer, whilst extraordinary in form, reflects a broader recalibration of Western industrial policy toward technology sectors deemed critical to economic security.
The United States enacted the CHIPS and Science Act with similar objectives. Other jurisdictions are pursuing comparable strategies, signalling that the era of purely market-driven semiconductor supply chains has effectively ended.
What remains uncertain is whether the current truce represents a durable resolution or merely a temporary pause in a longer-term restructuring of global technology supply chains. The one-year suspension of various export controls and tariff measures negotiated in Busan provides breathing room but does not resolve the underlying tensions that produced the crisis. The Dutch government retains control of Nexperia, with restrictions on asset transfers and personnel changes remaining in force. Beijing's willingness to deploy export controls as geopolitical leverage has been clearly demonstrated.
For automotive manufacturers, the lesson is unambiguous. Supply chain resilience can no longer be assumed. The concentration of critical component production within geopolitically contested regions creates exposure to disruptions that individual companies cannot control through conventional procurement strategies. Whether the industry responds by diversifying suppliers, maintaining larger inventories, or redesigning vehicle architectures to reduce dependence on specific component categories remains to be seen.
What is certain is that the Nexperia crisis, even as it moves toward resolution, has permanently altered the landscape within which automotive supply chain decisions are made. The intersection of technology competition, national security concerns and industrial policy has become too consequential to ignore. Manufacturers that fail to account for these dynamics in their strategic planning do so at considerable risk.
