European carmakers seek to reduce dependence on China-made chips as the Nexperia dispute deepens

European manufacturers have been watching the geopolitics around semiconductors with growing unease. Even though China has eased some restrictions on chip exports, the wider dispute has not gone away, and European carmakers are looking for ways to curb their dependence on components made in China.

According to Bloomberg, citing people familiar with the matter, a number of European brands are putting pressure on their suppliers to identify lasting alternatives to Chinese semiconductors.

Matthias Zink, President of CLEPA (the European Association of Automotive Suppliers), says the sector is weighing significant changes to its supply networks to fit the new reality. “We were already seeing early signs in questions such as ‘how can you supply us without this dependence on China?’”, he said.

European carmakers and suppliers look for alternatives to China-made chips

The chip supply chain is currently built around cross-border flows, leaving it one of the most exposed pressure points in the China–US confrontation - and placing Europe in a secondary position when disruptions hit.

“Its more than a temporary disruption. It’s a structural risk: geopolitical decisions can instantly reshape the entire supply economy,” warned Sapna Amlani, who leads Moody’s global supply-chain practice.

A difficult transition

That shift will not be straightforward. Reworking established supply chains is expensive and complicated. Zink estimates that moving sourcing out of China - whether for batteries, chips or rare earths - could take between three and seven years, depending on the component.

Nexperia dispute highlights Europe’s semiconductor vulnerability

Tensions sharpened further with the Nexperia case. The Dutch semiconductor maker is controlled by China’s Wingtech, and the Chinese Government banned the export of chips produced by the company’s China-based division. The move was framed as a response to the Netherlands - under US pressure - temporarily nationalising Nexperia to limit Wingtech’s influence.

Amsterdam’s decision prompted Beijing to block exports and cut off supplies of chips that are essential to Europe, a move that threatened to bring - and did bring - several automotive production lines to a halt. Nexperia holds more than 20% of its segment of the market.

The knock-on effects were swift. Honda lowered its annual profit forecast after suspending production at several plants; the Volkswagen Group and BMW set up special task forces to secure semiconductor supply. Among suppliers, ZF Friedrichshafen and Robert Bosch were also forced to scale back output.

Potential replacements for Nexperia include the US firms OnSemi, Vishay and Diodes, as well as Japan’s Rohm.

The tip of the iceberg

Beyond the chip dispute, concerns are also building around the supply of rare earths, which are crucial for motors and batteries in electric vehicles. Here too, China has a dominant position and has used that advantage as a political lever.

CLEPA argues that this dependence amplifies the risks created by the European Union’s decision to move exclusively to electric vehicles from 2035. “We should have no illusions about this. It will be difficult for decades,” Zink concluded.