The head of Europe's largest technology company issued a stark warning about the fragility of global semiconductor supply chains, following a diplomatic crisis that threatened to halt automotive production across three continents.
ASML CEO Christophe Fouquet emphasized that recent tensions between the Netherlands and China over chipmaker Nexperia serve as a critical reminder of how vulnerable the semiconductor ecosystem remains to geopolitical disruptions.
Fouquet's comments, delivered during an interview on Dutch television program Buitenhof, came as senior government officials prepared to fly to Beijing for emergency negotiations aimed at resolving the standoff.
The ASML chief called for all parties to demonstrate responsibility and prioritize dialogue over escalation, stressing that the semiconductor industry's interconnected nature demands careful diplomatic handling to prevent supply chain collapse.
What Makes Semiconductor Supply Chains So Vulnerable
The global semiconductor industry operates through highly specialized, geographically dispersed manufacturing networks where single points of failure can trigger cascading disruptions.
ASML exemplifies this concentration risk as the world's sole supplier of extreme ultraviolet lithography machines, equipment essential for producing advanced chips used in artificial intelligence systems and smartphones.
The company holds a near monopoly in lithography technology, controlling approximately 90 percent of the global market for such equipment.
This specialization extends throughout the supply chain, with companies like Nexperia dominating specific chip categories despite modest overall revenue.
Nexperia controls roughly 40 percent of the global market for basic automotive semiconductors, including transistors and diodes, components critical for vehicle systems ranging from windshield wipers to climate control.
The concentration of production in particular facilities, coupled with limited alternative suppliers, creates systemic vulnerability when diplomatic tensions interrupt trade flows.
Did you know?
ASML holds a complete monopoly on extreme ultraviolet lithography machines, the only technology capable of manufacturing chips below 7 nanometers, making it the sole enabler of advanced AI chip production worldwide.
How the Nexperia Standoff Disrupted Global Auto Production
The crisis began in September 2025 when Dutch authorities invoked Cold War-era emergency legislation to seize control of Nexperia, a Chinese-owned semiconductor manufacturer based in the Netherlands, citing national security concerns.
China retaliated immediately by blocking exports of Nexperia chips manufactured at the company's Chinese facilities, effectively cutting off supply to major automotive manufacturers across Europe, North America, and Asia.
Automakers, including Honda, Nissan, and Volkswagen, scrambled to secure alternative chip sources as production lines faced imminent shutdown.
Honda suspended operations at its Celaya, Mexico, facility, capable of producing 200,000 vehicles annually, while Volkswagen indicated it had only days of inventory remaining before production impacts would materialize.
The European Automobile Manufacturers' Association warned that assembly line stoppages could occur within days unless diplomatic solutions emerged, echoing the industry-wide semiconductor crisis experienced during the pandemic in 2021.
Why Dialog Matters More Than Escalation in Chip Disputes
Fouquet noted that the Nexperia situation demonstrated how escalation can occur before adequate dialogue takes place, describing it as a reversal of the preferred approach where communication precedes restrictive actions.
The ASML CEO emphasized that the semiconductor industry's critical importance to modern economies requires all stakeholders to exercise restraint and engage in substantive negotiations.
His call for responsibility reflects growing recognition that chip supply disruptions carry consequences far beyond individual companies or sectors.
Dutch Economic Affairs Minister Vincent Karremans confirmed that a senior government delegation would travel to Beijing this week to continue efforts toward finding a mutually agreeable solution.
China's Ministry of Commerce responded by urging the Netherlands to demonstrate a genuine willingness to cooperate and present constructive proposals.
The diplomatic engagement suggests both sides recognize the economic costs of prolonged supply chain disruption, particularly as automakers established war rooms to manage component shortages and explore emergency procurement options.
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What ASML Stands to Lose in the China-Netherlands Tensions
ASML maintains significant business exposure to China, with the Chinese market projected to account for over 25 percent of the company's total sales in 2025, according to recent financial disclosures.
In the third quarter of 2025, China represented 42 percent of ASML's net system sales, up substantially from 27 percent in the previous quarter.
This concentration makes the company particularly sensitive to deteriorating bilateral relations between the Netherlands and China.
Despite the tensions, Fouquet indicated he believes the worst of the crisis has passed and that near-term business impacts should remain limited.
However, ASML previously warned that Chinese customer demand is expected to decline significantly in 2026 compared to the strong performance experienced in 2024 and 2025.
The company's unique position as the only producer of EUV lithography equipment means any restriction on technology transfers to China could reshape global semiconductor manufacturing capacity and market dynamics.
Can Diplomatic Efforts Prevent Future Chip Supply Crises
China granted export exemptions for civilian use of Nexperia chips on November 1, providing immediate relief to automakers facing production shutdowns.
However, wafer shipments from Nexperia's European plants to Chinese facilities have not fully resumed, leaving supply chains in a precarious state.
The European Automobile Manufacturers' Association warned that conditions will remain critical until secure, predictable supply flows are reestablished across all manufacturing locations.
The ongoing negotiations between Dutch officials and Chinese authorities will test whether diplomatic frameworks can effectively manage semiconductor trade disputes without triggering broader economic damage.
Industry observers note that the Nexperia crisis exposed gaps in international mechanisms for addressing technology security concerns while maintaining supply chain stability.
As semiconductor manufacturing becomes increasingly central to economic competitiveness and national security strategies, the outcome of these talks may establish precedents for how future conflicts over chip technology and production are resolved, either through measured dialogue or escalating restrictions that fragment global supply networks.
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