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On September 30, 2025, to intervene in Nexperia’s operations, a semiconductor-focused Chinese-owned company. The government had cited “” and the risk that vital technological capabilities could be shifted out of Europe, and it gave itself the power to reverse or even block decisions deemed harmful to both Dutch and European economic security.

Nexperia, as a company, is not a glamorous AI-chip producer as the media tends to focus on, but rather a supplier of “legacy” semiconductors used in both cars and other consumer electronics, which was formerly part of Philips’ semiconductor operations and was . However, . The response from Beijing was swift. In early October, China’s Commerce Ministry . It halted exports of Nexperia chips from China, turning the regulatory move into a global supply chain incident. Nexperia, for its part, warned its customers that it would no longer be able to guarantee the quality or authenticity of any chips produced in China after October 13, .

Suppliers and automakers alike suddenly discovered how exposed they were to the “boring” part of the chip world. The European Automobile Manufacturers’ Association and could force production lines to halt. The ripple effects of supply chain issues caused by the Dutch regulatory provision were felt even in North America, and had either sought other suppliers or exemptions from the control measures imposed by China.

By mid-November, after talks involving partners such as the United States, China decided to ease its export ban on Nexperia, and the , citing steps taken by Beijing to restore chip flows to Europe. The immediate crisis seems to have been managed for the time being. However, the events of the last three months have exposed apparent limitations in the resilience of Europe’s semiconductor industry.

On Paper: Ambitious. In Reality: Dependent

The is intended to double the European share of the global semiconductor market to 20% by 2030, strengthen and resilient supply chains, and minimize Europe’s dependency on foreign suppliers. However, the that this target is unlikely to be met, and that the EU market share is currently only projected to be 11.7% in 2030.

Interestingly, identified semiconductors as one of the four “critical technology areas” that require risk assessments by its member states, other critical areas included biotech, quantum, and AI technologies. However, the Nexperia case reveals that Europe’s most glaring deficiencies are not only at the bleeding edge of semiconductor design, but also that the assembly, testing, and production of older-generation chips have been, for the most part, offshored to China. This is consistent with broader statistics on digital dependence. For example, the relayed estimations that the EU relies on non-EU suppliers for more than 80% of its digital products, services, and infrastructure, and that China supplies approximately 71% of the EU’s gallium and 45% of its germanium, both of which are irreplaceable materials needed for semiconductor production. In other words, Europe is attempting to establish some degree of technological sovereignty on a foundation that is deeply entangled with Chinese output, especially in the least glamorous parts of the value chain.

Lessons

The EU now centres discussions on “” from China to manage interdependence and to diversify rather than simply sever ties with China altogether. The Nexperia case offers a sneak peek at what this could mean in practice.

First, it would require regulatory teeth, such as the willingness to use emergency security tools, including the , and EU-level export control and investment screening, to keep critical capabilities anchored in Europe when market incentives may point elsewhere. Second, it demands a redesign of the supply chain. Ensuring that 70% of a critical supplier’s output is not hostage to policy decisions made by China means not only investing in high-end chips, but also in the often-forgotten parts of the industry, such as test facilities, packaging plants, and the raw materials they rely on. The Nexperia saga serves as a great case study in the potential costs of ignoring such links. Third, de-risking not only implies reshoring but also friend-shoring. , launched in 2022, aims to make Canada a global “supplier of choice” for critical minerals and the clean technologies they enable, such as semiconductors. The recent builds upon this strategy by committing new funding to raw mineral extraction and export. Canada and the EU already have a from 2021, which commits both sides to integrating Canada-EU raw materials value chains and reducing strategic dependencies on other supplier countries. For Europe, treating that partnership more as a core pillar of its long-term semiconductor security strategy would be a meaningful act of de-risking.

The Nexperia crisis is a preview. As Europe tightens export controls and pushes its Chips Act forward, similar flashpoints are likely, mainly around similar firms and technologies. The question is whether European policymakers are prepared and willing to pay both the financial and political costs of reducing dependencies and taking proactive measures rather than simply reacting when a single chip company suddenly becomes the chokepoint of global production.