The European Commission is preparing to introduce binding requirements for carmakers to source semiconductors from at least two suppliers in certain cases, according to a draft law expected next month. The measure, part of the revamped Chips Act 2, aims to prevent excessive reliance on single chip providers, particularly those linked to China, after the Nexperia episode exposed critical vulnerabilities in Europe's automotive supply chain.
Two EU officials confirmed that the legislation will apply to major manufacturers including Volkswagen, Stellantis, and Renault. The current draft is still under discussion within the Commission and may see last-minute adjustments before its formal presentation on 3 June.
Lessons from the Nexperia Crisis
The shift from voluntary recommendations to mandatory rules was catalyzed by the crisis at Nexperia, a Netherlands-based chipmaker acquired in 2019 by Wingtech, a Chinese partially state-owned conglomerate. Nexperia produces relatively basic semiconductors used in car lights but held an estimated 10% of the global market share and up to 40% of the European automotive market.
In December 2024, Wingtech was placed on US sanctions lists due to potential military applications of its chips. The blacklisting extended to Nexperia, prompting the Dutch government to seize temporary control of the company to prevent technology and asset transfers to China. Beijing retaliated by halting exports of Nexperia chips produced in China, triggering a shortage that rippled through European automotive supply chains. The situation was resolved only after de-escalation of US-China trade tensions in November, but the industry is still recovering.
For EU policymakers, the episode underscored that the automotive sector had not learned from earlier supply chain shocks. Following China's export ban, major European manufacturers had stockpiles lasting only a couple of months. "The Chip Act 2 will reflect today's technology landscape and geopolitical realities," said Thomas Regnier, the Commission's spokesperson for tech sovereignty.
Strategic Autonomy and Economic Costs
The proposed legislation is designed to bolster Europe's strategic autonomy by reducing overreliance on a single provider and boosting demand for European chip production. "When it comes to semiconductors, resilience and technological sovereignty are absolutely crucial," Regnier added, emphasizing that the proposal will not increase regulatory burden for companies.
However, supplier diversification carries economic costs. Many Chinese providers are heavily state-subsidized, allowing them to undercut competitors and tighten their grip on key supply chain chokepoints. The new rules would require carmakers to weigh geopolitical risks alongside economic factors when making procurement decisions.
The Commission has consistently made supply chain risk a pillar of its economic security agenda, pushing European companies to decouple from vendors considered risky, particularly those linked to hostile powers. This aligns with broader EU efforts to enhance technological sovereignty, as seen in the EU budget overhaul that faces pressures from defence and climate goals.
The automotive industry has been through a series of supply crises since the COVID-19 pandemic triggered a global chip shortage. The first Chips Act included measures to anticipate and mitigate supply chain crises across critical sectors, but car manufacturers were not subjected to the strictest obligations. Now, EU officials believe the time for recommendations has passed.
The Nexperia crisis cemented Brussels' conviction that the car industry will keep hitting the same wall. For European carmakers, the new rules represent a significant shift in procurement strategy, forcing them to balance cost efficiency with resilience. The outcome will be closely watched by other sectors, as the EU's push for technological sovereignty extends beyond automotive into areas like AI strategy and defence.
