Trade rows over technology rarely make for light reading, yet this one touches everyday life more than most. From the cars we drive to the devices in our pockets, obscure materials have become powerful bargaining chips. A recent clash involving Europe and China shows just how exposed modern economies can be.
What The Nexperia Affair Reveals About Power
The dispute around Nexperia has acted like a stress test for global supply chains. Once a division of Philips, the company was sold in 2017 to a Chinese fund before coming under the control of Wingtech Technology. Although headquartered in the Netherlands, Nexperia now operates within a delicate political triangle linking China, Europe and the United States.
When pressure from Washington mounted, local managers suspended the firm’s Chinese leadership. Beijing’s response was swift. Exports of Nexperia’s so called mature chips, widely used in the automotive sector, were halted. At the same time, China tightened restrictions on exports of rare earth materials, a move that underlined its ability to use supply chains as a form of geo economic leverage.
Anyone who remembers supermarket shortages during the pandemic will understand the effect. When supply stops, panic travels faster than policy.
Why Industry Suddenly Found Its Voice
The impact was felt almost immediately across European car factories. Industry groups such as the European Automobile Manufacturers’ Association warned that production lines could grind to a halt within weeks. In Germany, government officials convened emergency meetings with manufacturers including Volkswagen and Stellantis.
This pressure explains why the episode quickly became political. For all the talk of sovereignty, foreign policy still bends when factories risk shutting down. China’s message was clear. It can disrupt European industry without firing a shot.
Yet analysts caution against calling this a lasting victory. Short term disruption often accelerates long term change. By demonstrating the risks so starkly, Beijing may have pushed Europe to move faster on strategic autonomy.
Europe’s Dependency Problem In Black And White
The numbers explain Europe’s vulnerability. According to the European Commission, the bloc relies almost entirely on China for several critical materials. Around 60 percent of global rare earth extraction takes place there, but China controls roughly 90 percent of refining and more than 90 percent of magnet production.
This did not happen overnight. Over decades, Europe focused on design, services and research, while environmentally sensitive steps like mining and refining were outsourced. China, by contrast, invested heavily in these stages from the early 2000s onwards.
A friend working in industrial policy once described it bluntly. Europe kept the brains of the operation, China built the muscles.
Can Europe Really Change Course?
In response, the European Union has launched a de risking strategy centred on the Critical Raw Materials Act and the Chips Act. The aim is to rebuild local capacity, from refining to magnet production. Canadian firm Neo Performance Materials has opened Europe’s first rare earth magnet plant in Estonia, backed by state funding. In France, Solvay is scaling up similar operations.
These steps matter, but they will take years to deliver scale. In the meantime, dependence remains a reality. Europe still produces only a fraction of the semiconductors it consumes, particularly in the mature chips that quietly power cars and appliances.
So did China win? In tactical terms, yes. It proved it can squeeze supply chains at will. Strategically, the picture is murkier. The episode has strengthened Europe’s resolve to reduce reliance, even if success is far from guaranteed.
For consumers, the lesson is sobering. The next delay in car deliveries or price rise in electronics may trace back not to a factory fault, but to a struggle over materials most of us never think about. In a world built on critical supply chains, those hidden resources have never been more powerful.
