Honda Halts Highlight Nexperia Supply Split as China Unit Seeks Domestic Wafers

Honda stoppages expose a widening chip supply dispute

Honda Motor has halted production at its Mexico plant and adjusted operations in the United States and Canada as a dispute between Nexperia's Chinese operation and its Dutch parent interrupts supplies of essential chips. Several Honda plants in Japan are also scheduled to stop production on January 5 and 6, 2026, with reduced operations expected to continue until January 9.

At the center of the disruption is Nexperia's manufacturing base in Dongguan, Guangdong province. The facility historically accounted for roughly 70% of the company's total output and is one of the world's largest producers of chips for vehicles and industrial equipment. A breakdown in its supply of silicon wafers has put pressure on customers far beyond China.

Wingtech Technology, the Chinese owner of Nexperia China, outlined the dispute at a shareholder meeting in Shanghai on Friday, December 26. It accused Nexperia's headquarters in Nijmegen, the Netherlands, of stopping wafer shipments on October 29 after the Chinese unit refused payment for materials already delivered. Wingtech also alleged that the Dutch side had restricted transfers of money within the company.

Nexperia's Dutch parent says contractual breaches and problems with company governance forced it to act. The disagreement now reaches beyond payments: the Chinese operation has declared independence from European management, governments have intervened, and both sides are developing ways to operate with less reliance on each other.

As of December 29, automakers face an immediate shortage while Nexperia faces a longer struggle over who controls its operations, where its chips are made and which suppliers will provide their essential materials.

How payments became a fight over control

The Netherlands intervened in September through the Ministry of Economic Affairs, which invoked the 1952 Goods Availability Act to take temporary control of the Dutch chipmaker. The government cited national security concerns and barred Nexperia from relocating assets for one year without government approval.

That intervention was followed by a court action affecting the company's leadership and ownership rights. At an emergency hearing on October 7, the Dutch Enterprise Chamber removed chief executive Zhang Xuezheng, who is also Wingtech's founder, and placed all voting rights held by Wingtech under an independent administrator.

Nexperia subsequently appointed chief financial officer Stefan Tilger as interim chief executive. Wingtech has said a hearing on the broader dispute will take place in the Netherlands in January, although no exact date was given.

The payment conflict has made this struggle over control an operational problem. Silicon wafers are the material on which semiconductor devices are made. Nexperia's European and Chinese operations have depended on each other for different stages of production, so stopping shipments between them interrupts the route from manufacturing a chip to delivering a finished component.

Wingtech's account places the October 29 shipment suspension after the Chinese unit's refusal to pay for delivered materials. The Dutch parent's explanation centers on breaches of contracts and governance concerns. Those competing positions have left customers trying to secure parts from a company whose operations are increasingly acting separately.

The dates that shaped the disruption

The crisis developed through a series of government, court and company decisions. Each changed a different part of the supply chain, from control of assets to the movement of finished chips.

• September 2025: The Dutch Ministry of Economic Affairs invoked the 1952 Goods Availability Act and imposed temporary controls on Nexperia.
• October 7: The Dutch Enterprise Chamber removed Zhang Xuezheng as chief executive and put Wingtech's voting rights under an independent administrator.
• Since mid-October: The Dongguan plant has produced and delivered more than 11 billion chips to over 800 customers worldwide despite pressure on wafer supplies.
• October 29: According to Wingtech, Nexperia's Dutch headquarters suspended wafer shipments after the Chinese unit refused payment for delivered materials.
• November: The Netherlands and China relaxed government measures affecting the company and its exports, while the underlying dispute continued.
• December 26: Wingtech described the supply breakdown at its shareholder meeting in Shanghai.
• January 2026: A Dutch delegation is due to visit China, a court hearing is expected in the Netherlands, and Honda has scheduled further production interruptions in Japan.
• First and second quarters of 2026: Nexperia China expects to complete validation of domestic wafer suppliers.

November's easing of government measures has therefore left a separate company dispute to resolve. Access to exports and access to the wafers needed to make those exports are two different parts of the same production process.

Dongguan keeps shipping, but customers face shortages

The Dongguan facility has continued operating at a reduced level. Wingtech described a "significant gap in wafer supply," yet the plant has produced and delivered more than 11 billion chips to over 800 customers worldwide since mid-October.

The reported decline in output was 14%. Before the dispute, Nexperia's annual production exceeded 110 billion devices. Those figures show the scale of a business supplying large numbers of small components that vehicle and industrial manufacturers need to keep their own lines running.

Honda's interruption in Mexico and operational changes in the United States and Canada are the most visible consequences so far. Its planned stoppages in Japan on January 5 and 6 will extend the disruption into the new year, with reduced operations expected through January 9.

Other automakers, including Volkswagen, and customers of major suppliers such as Bosch and Hella are also feeling pressure from the shortage. The problem reaches beyond an automaker's direct purchases because suppliers need chips for the parts they deliver to vehicle assembly plants.

Chinese carmakers are affected too. A person familiar with the matter said low wafer inventories at Dongguan had begun causing shortages for domestic manufacturers, particularly of logic devices, transistors and diodes. These are among Nexperia's most popular products. In simple terms, they help circuits process signals, switch electrical current and control the direction in which current flows.

Customers try a route around the internal blockade

Some automakers and parts suppliers are exploring an arrangement that separates payments and responsibilities between Nexperia's European and Chinese operations. Customers would buy silicon wafers directly from Nexperia's factory in Hamburg, arrange transport to China and contract the Dongguan plant to carry out final packaging.

Packaging is the stage that prepares a semiconductor device for use as a finished component. Under this arrangement, customers would take responsibility for moving material between the two operations rather than relying on Nexperia's usual internal supply route.

A Nexperia product distributor said many companies were negotiating this approach. Some had already begun buying wafers from Nexperia Europe and providing them to the Chinese unit to obtain exclusive production slots.

The arrangement treats the European and Chinese divisions as separate businesses, with each paid for its own contribution. That addresses the payment problem at the heart of the standoff while allowing customers to continue using production capacity on both sides.

Smaller automotive suppliers face a harder task. Coordinating wafer purchases, international transport and packaging requires resources and bargaining power that they may lack. The workaround can help large customers secure immediate supplies, but it is not a practical answer for every company dependent on Nexperia components.

China seeks enough domestic wafers for 2026

Nexperia China is pursuing a second route: replacing European wafers with supplies from Chinese manufacturers. Its validation of domestic suppliers is expected to finish between the first and second quarters of 2026, creating a parallel supply chain that bypasses the Netherlands.

A document describing the Chinese unit's plans says it has secured local silicon wafer supplies covering its entire 2026 production of key products. The focus is on insulated-gate bipolar transistor (IGBT) power chips and modules. These act as switches that regulate electrical current in electric vehicles and industrial equipment.

Wingtech is accelerating verification of wafers from its own foundry, Wingsky Semi, to ensure what it called "abundant supply." A foundry is a factory that manufactures semiconductor devices on wafers. Verification checks whether material from a supplier meets the requirements for the products in which it will be used.

Wingsky Semi is set to provide 12-inch IGBT wafers suitable for automotive use. Its Shanghai production base has a capacity of 30,000 wafers per month. Nexperia China has also secured supplies of 8-inch IGBT wafers from Shanghai GAT Semiconductor and United Nova Technology Co, a fabrication plant linked to Semiconductor Manufacturing International Corp (SMIC).

The stated sizes describe the diameter of the wafers. The central change for customers is who makes the material entering Nexperia China's production process. Domestic sourcing would reduce the Chinese unit's dependence on shipments from Europe, while placing greater responsibility on the qualification of replacement suppliers.

For Chinese automakers already facing shortages of logic devices, transistors and diodes, this shift is a response to immediate supply pressure. It also moves Chinese production toward greater reliance on Chinese materials.

Washington focuses on supplier checks and vehicle safety

Raja Krishnamoorthi, ranking member of the US House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, has asked Commerce Secretary Howard Lutnick for answers about the crisis.

In a letter to Lutnick, Krishnamoorthi warned that the dispute exposes vulnerabilities in supplies of legacy semiconductors. These are established types of chips widely used in vehicles and industrial products, including the components now affected by the Nexperia shortage.

Krishnamoorthi highlighted the use of Nexperia China chips across the automotive sectors of America's closest allies. He warned that switching to unvetted suppliers would raise concerns about safety certification, quality control and reliability, and urged the administration to assess how disruptions under Chinese control could affect automotive safety and recall risks.

His letter called for formal investigations into Wuxi NCE Power, Hangzhou Silan Microelectronics, Yangjie Technology and Wingsky Semi. The requested inquiries would examine ownership, possible state direction and potential circumvention of export controls.

The supply response and the safety concern meet at the same point: replacing a wafer supplier requires checking that the resulting component meets the demands of its intended use. Nexperia China's validation timetable is therefore central to its effort to restore dependable production.

Governments ease restrictions while seeking a settlement

China's Ministry of Commerce responded to the Dutch intervention with export controls restricting Nexperia China and its subcontractors from exporting specified finished components and subassemblies. Those measures added a government barrier to a supply chain already affected by a corporate dispute.

Both governments relaxed their measures in November, but tensions between the European and Chinese operations remain unresolved. Easing export restrictions allows more movement of finished goods; restoring the company's internal supply arrangements requires agreement on payments and control.

A Dutch delegation is due to travel to China in early January to seek a diplomatic resolution. Dutch economic affairs minister Vincent Karremans welcomed China's decision to ease export restrictions while remaining cautious about the longer term outlook.

The January diplomacy will take place alongside the expected Dutch court hearing and Honda's further production interruptions. These parallel events show how closely the legal, diplomatic and manufacturing sides of the dispute are connected.

An $8 billion claim and two emerging production networks

Wingtech is also considering international arbitration. A company representative said the Dutch government's intervention may violate a bilateral investment protection agreement dating from 2001 and warned of claims of up to $8 billion if the issue is not resolved within six months.

Investment protection agreements set rules for how countries treat investments covered by them. Arbitration would take Wingtech's complaint into an international dispute process. The threatened amount would place the case among the largest damages claims in recent corporate history and reflects the financial value attached to Nexperia's Chinese operations.

The January legal proceedings could help determine whether the company can bring its operations back together or moves toward a permanent split. At the same time, both sides are making practical changes that reduce their dependence on Dongguan's established relationship with Europe.

Nexperia's European arm is exploring expanded packaging operations in Malaysia and the Philippines. The Chinese unit is strengthening relationships with local factories, including Wingsky Semi and Shanghai GAT Semiconductor.

Dongguan's historical share of roughly 70% of Nexperia output explains why replacing that relationship is such a substantial task. Europe is considering alternative locations for packaging, while China is securing alternative sources of wafers. Each side is trying to replace the part of production it previously obtained from the other.

The customer arrangements being negotiated today could become lasting operating practices. Buying European wafers separately and sending them to China for packaging already treats the two operations as distinct suppliers. If their production networks continue to separate, automakers could face two distinct pools of components rather than the integrated Nexperia supply chain on which they previously relied.

The Bottom Line

• Honda has halted output in Mexico and adjusted operations in the United States and Canada. Further stoppages in Japan are scheduled for January 5 and 6, with reduced operations expected through January 9.
• Dongguan historically produced roughly 70% of Nexperia's output. It has delivered more than 11 billion chips to over 800 customers since mid-October despite a wafer shortage.
• The Dutch government intervened in September, and the Dutch Enterprise Chamber removed Zhang Xuezheng as chief executive on October 7.
• Wingtech says European wafer shipments stopped on October 29. Some customers are buying European wafers directly and arranging packaging in China.
• Nexperia China expects to validate domestic wafer suppliers during the first and second quarters of 2026 and has secured local supplies for its 2026 production of key IGBT products.
• Krishnamoorthi has requested supplier investigations and an assessment of risks to automotive safety, reliability and recalls.
• Wingtech has threatened arbitration claims of up to $8 billion. A Dutch delegation's China visit and a Dutch court hearing are expected in January.