Wingtech Technology, a Chinese semiconductor giant, is suing its own subsidiary, Nexperia, in a Chinese court. The lawsuit demands at least 8 billion yuan, around $1.1 billion, in damages. The conflict stems from the Dutch government’s seizure of Nexperia in late 2025.

Nexperia, with headquarters in the Netherlands, makes chips critical for Europe’s carmakers and electronics firms. The Dutch government used an old Cold War-era law to seize the company. They cited “serious governance shortcomings” and risks to Europe’s technology security.

This seizure marked the first time a European government forcibly took control of a Chinese-owned tech company. The move suspended Wingtech’s chairman from Nexperia’s board and shifted control to a Dutch team. The Dutch argued that Nexperia’s chips are too important to European industry to remain under Chinese control.

China’s Legal Pushback and Supply Chain Turmoil

Wingtech responded by filing a lawsuit invoking China’s Anti-Foreign Sanctions Law. This law, passed in 2021, is designed to help Chinese companies fight back against foreign restrictions. While Chinese courts can’t order the Dutch government to act, they can target Nexperia’s operations inside China.

That matters because part of Nexperia’s chip production still relies on Chinese factories. After the seizure, China blocked exports of chips made in these Chinese plants. This cut off a crucial part of Nexperia’s supply chain and deepened the production crisis.

To adapt, Nexperia has started expanding packaging and assembly capacity in Malaysia and the Philippines. This move aims to make up for lost volume from China and keep some chip output flowing. Wingtech is also building a more localized supply chain in China, working with subsidiaries to supply wafers and materials.

European Automakers Face a Growing Chip Shortage

The chip shortage hit Europe’s car industry hard. Automakers like Volkswagen and Honda rely on Nexperia for auto-grade chips. Without a steady supply, production lines slowed or stopped. The shortage echoes the global chip crisis from 2020 to 2023, which exposed how fragile just-in-time supply chains are.

The European Union is now considering a temporary lift on sanctions against Nexperia. This move would ease restrictions on chip exports and help automakers avoid running out of critical components. The EU’s proposal reflects the urgent risk: auto factories could face production halts if chips run out.

Yet, this relief is only temporary. The core dispute between Nexperia’s Dutch and Chinese operations remains unresolved. Chip inventories in European car factories are dangerously low. Industry experts warn that automakers still face serious vulnerabilities in their supply chains.

Meanwhile, the EU is also eyeing a temporary exemption for Yangzhou Yangjie Electronic Technology, another Chinese chipmaker. Yangjie was sanctioned for supplying technology to Russia but has become key to filling the chip gap left by Nexperia. European automakers say their chip stocks could run out within weeks without this exemption.

This situation highlights a broader problem: Europe depends heavily on foreign chip suppliers, especially from China. While the EU’s Chips Act aims to boost domestic production, building new fabs and supply chains takes years and huge investments. For now, Europe must manage its reliance on complex global chip networks.

Geopolitics at the Heart of Semiconductor Supply

The Nexperia saga shows how semiconductor supply chains have become geopolitical battlegrounds. The US pressured the Netherlands to act against Wingtech, fearing Chinese control of strategic technology. The Netherlands insists its move was about protecting European economic security, not US influence.

China’s export restrictions on Nexperia chips and the legal fight are part of a wider tech standoff between East and West. Each side uses trade rules and sanctions as leverage. For companies caught in the middle, like Nexperia, it means navigating conflicting demands and risks of disruption.

For investors and industry watchers, the key question is whether Beijing, Brussels, and The Hague can find a lasting solution. Until then, European automakers face ongoing chip shortages. And the global tech industry will keep watching how governments use law and policy to shape the future of chips.