NAIROBI – A fierce six-week trade standoff between the Netherlands and China over a critical semiconductor firm, which threatened to halt global car production, serves as a stark "wake-up call" to the world, according to the Dutch minister at the centre of the crisis. For Kenya, this "economic thriller" unfolding thousands of miles away has direct implications, highlighting the nation's vulnerability to global supply chain shocks that could translate into higher vehicle prices and limited availability in the local market.

The dispute erupted in late September 2025 when the Dutch government, under Minister for Economic Affairs Vincent Karremans, took supervisory control of Nexperia, a Netherlands-based but Chinese-owned chipmaker. The government invoked a rarely used Cold War-era law, the Goods Availability Act, citing risks to "European economic security" and "serious governance shortcomings" at the firm. In retaliation, Beijing blocked the export of Nexperia's chips from its assembly plants in China, effectively choking a critical component pipeline for the world's automotive industry.

Implications for Kenya's Automotive Sector

While the immediate crisis shows signs of easing after diplomatic talks, the incident exposes a fragility in the global supply chain that directly affects Kenyan consumers and the local auto industry. Kenya's automotive market is heavily reliant on imports, with data from the Kenya National Bureau of Statistics (KNBS) showing 78,127 vehicles were imported in 2023. A significant portion of this market consists of used vehicles, primarily from Japan, which accounts for over 80% of imports.

Any global disruption that halts or slows vehicle production inevitably tightens the supply of both new and used cars available for export. The 2020-2023 semiconductor shortage provided a clear precedent, causing global vehicle production to plummet by millions of units and driving up the prices of used cars in Kenya. A similar scenario resulting from the Nexperia dispute could see fewer vehicles arriving at the Port of Mombasa, leading to increased competition and higher prices for consumers already facing costly loans and taxes. The International Monetary Fund (IMF) has noted that such global supply chain pressures have a sizeable impact on inflation in sub-Saharan African countries.

An 'Economic Thriller' Unfolds

Nexperia, though not a household name, is a dominant supplier of essential semiconductors, controlling an estimated 40% of the market for basic chips like transistors and diodes used in vehicles. These components are fundamental for numerous functions, from engine management and anti-lock brakes to modern infotainment systems. On October 10, 2025, Nexperia formally notified automakers it could no longer guarantee chip deliveries, sending shockwaves through the industry. The European Automobile Manufacturers' Association (ACEA) warned that its members, including Volkswagen, BMW, and Renault, had only weeks of inventory before assembly lines would be forced to stop.

The Dutch intervention on September 30 followed a US Commerce Department decision on September 29 to expand its Entity List restrictions to include subsidiaries of blacklisted companies. Nexperia's parent company, the partially state-owned Wingtech Technology, was added to this list in December 2024. Despite the timing, Minister Karremans has denied being pressured by the United States. Court documents later revealed that US officials had warned their Dutch counterparts in June 2025 that Nexperia's Chinese CEO, Zhang Xuezheng, would need to be replaced to avoid the restrictions. The Dutch government cited alleged mismanagement by Zhang as a key reason for its intervention.

A Fragile Resolution and Lingering Risks

After weeks of high-level diplomatic talks between Dutch and Chinese officials, China began to partially lift the export ban in early November 2025, allowing shipments for non-military use to resume. German auto supplier Aumovio confirmed it had received an export license, and major manufacturers like Volkswagen reported a partial restoration of deliveries, narrowly averting widespread factory shutdowns.

However, the underlying geopolitical tensions between the US and China over technological supremacy remain. The dispute has served as a powerful illustration of how economic security is now intrinsically linked to control over critical technologies like semiconductors. For Kenya and other import-dependent nations, the Nexperia crisis is a clear warning. The stability of local markets for essential goods like vehicles is increasingly tied to geopolitical maneuvering between global powers. While this specific standoff has been de-escalated, the fundamental vulnerabilities it exposed in the global supply chain persist, posing a continued risk to consumers and economies worldwide.