Under the hood: Nexperia’s nationalization sparks unavoidable disruption in the global automotive supply chain

Drawing on Yole Group’s in-depth semiconductor and power electronics research, this article features insights from Principal Analysts Milan Rosina, Pierrick Boulay and Yu Yang, and offers a global perspective on the transformation of the power semiconductor industry.

In 2024, over 50% of Nexperia’s USD 2.06 billion revenue came from automotive applications. Its chips power countless vehicle systems, from window motors to electronic control units and inverters.

The company’s end customers span major European and American OEMs and extend to some Asian automakers, including Chinese ones. The breadth of its design-in base makes Nexperia’s stability a cornerstone for the automotive semiconductor ecosystem. Based on Yole Group’s teardown database, analysts have documented almost a hundred Tier-1s, spanning from powertrain, ADAS, infotainment, and body domains. All have components from Nexperia. This literally means that every OEM has something from Nexperia, which might be unknown to some of them.

Vehicles rely on tens of thousands of validated parts working together, semiconductors included. If even a single small chip becomes unavailable, assembly lines grind to a halt.

For now, car makers can run on existing inventory. But if the situation persists, production halts could appear within weeks as inventories in the automotive industry are not particularly large. The challenge is compounded as multiple products are supplied by the same supplier.

The lesson is familiar: the COVID-19 chip crisis exposed how deeply vehicle production depends on just-in-time semiconductor supply. “This is déjà vu,” warn analysts at Yole Group. Indeed, OEMs have learned to qualify multiple vendors, but some device classes, like low-voltage discretes, remain thinly sourced.

Fortunately, most of Nexperia’s products are relatively simple components, not tied to functional complex or embedded software. This means that substitution by other suppliers is technically feasible. However, qualification, validation, and logistics take time.

Yole Group observes that European Tier-2 suppliers could absorb part of the gap, but they also depend on global back-end capacity. Some OEMs have started remediation plans, and a new supply chain is in the incubation stage. Although it is technically easy to substitute for most devices, the challenge lies in capacity. For example, when Yole Group prepared this article, Volkswagen announced that it had secured a substitute supplier to Nexperia. The unprecedented speed could only be achieved with a pre-defined remedy plan. Volkswagen is among the OEMs with clear awareness and action plans on semiconductors, having learned from the last chip shortage.

The Nexperia case lands at a delicate moment for carmakers. Electrification, digitalization, and AI integration are driving record demand for semiconductors, as detailed in the report, Automotive Semiconductor Trends 2025 from Yole Group. The European auto industry’s dependence on Asia for chip assembly and packaging remains its Achilles’ heel.

The nationalization signals to OEMs that supply chain resilience is now strategic, not optional. Many companies are revisiting “China + 1” strategies, developing backup sources in Southeast Asia, Europe, or the U.S., while adopting the “Made in China for China” model to secure local supply for the Chinese market (Related article: In EV race, China speeds, Europe pedals – Monthly Billet ).

Apart from unavoidable supply disruptions of certain vehicle models in the coming months, massive substitution of Nexperia products with those from regional Tier-2 players, and, in the very short-term, price pressure and reactive stockpiling, the message is clear: OEMs will need to develop comprehensive strategies to secure regional sourcing for critical components. Partnerships and joint ventures will need to balance efficiency with sovereignty.

The Nexperia case may not immediately cripple the automotive sector, but it sends a strategic wake-up call. Yole Group’s analysts have created a ‘Triple-C’ model to help automotive OEMs analyze their market status, examining their situation and strategies around semiconductor sourcing. Governments, suppliers, and automakers must collaborate to build a diversified semiconductor base capable of withstanding geopolitical shocks.

The key message from Yole Group is that the industry’s future depends on its ability to engineer trust across borders. The road to electrification and autonomy cannot be paved without stable semiconductor foundations, and Nexperia’s story is a reminder of how fragile that road still is.

Stay tuned on www.yolegroup.com!

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Milan Rosina, PhD, is Principal Analyst, Power Electronics and Battery at Yole Group.

Milan is engaged in the development of the market, technology, and strategic analyses dedicated to innovative materials, devices, and systems. His primary focus areas are e-mobility, renewable energy, power electronic packaging, and batteries.

Milan has 25 years of scientific, industrial, and managerial experience in equipment and process development, due diligence, technology, and market surveys in the fields of renewable energies, electric mobility, energy storage, batteries, power electronics, thermal management, and innovative materials and devices.

He received his PhD degree from the Grenoble Institute of Technology (Grenoble INP) in France.

Milan Rosina previously worked for the Institute of Electrical Engineering in Slovakia, Centrotherm in Germany, Fraunhofer IWS in Germany, CEA LETI in France, and utility company ENGIE in France.

Yu Yang, PhD, is Principal Analyst, Automotive Semiconductors at Yole Group.

Based in Belgium, Yu Yang is engaged in the development of technology and market products, dedicated to mobility electrification, and especially the automotive industry. Yu is deeply engaged in coordinating all studies and activities within the automotive industry.

Prior to Yole Group, Yu worked as a business development partner and R&D project leader at Punch Powertrain N.V. (Belgium), R&D project manager at Bekaert N.V. (Belgium), and a doctoral researcher at IMEC (Belgium).

Yu Yang holds a PhD in materials engineering from Leuven University (Katholieke Universiteit Leuven) in Belgium and a master’s in electrical engineering from Tsinghua University (China).

This article was developed in collaboration with Pierrick Boulay, Principal Analyst, Automotive Semiconductors at Yole Group.

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Source: www.yolegroup.com