European Commission to mandate chip supplier diversification for carmakers

The European Commission is forcing automakers to stop putting all their silicon eggs in one basket. New rules under the EU’s updated Chips Act will require car manufacturers to procure semiconductor chips from a minimum of two suppliers, a direct response to the Nexperia crisis that exposed just how fragile Europe’s automotive supply chain really is.

How one company’s crisis became everyone’s problem

Nexperia, the Dutch-headquartered but Chinese-linked semiconductor supplier, informed automakers on October 2, 2025, that it could no longer guarantee chip deliveries. The reason: the Dutch government intervened in Nexperia’s operations over national security concerns, effectively disrupting the flow of components to some of Europe’s biggest car brands.

BMW and Volkswagen both reported feeling the impact on their supplier networks by mid-October 2025. According to ACEA, the European automobile manufacturers’ association, buffer stocks of Nexperia chips could last only a few weeks.

Production halts were largely avoided, but only because major carmakers had contingency plans in place.

What the new rules actually require

The dual-sourcing mandate is straightforward in concept. Carmakers operating in the EU must now procure their semiconductor chips from at least two separate suppliers. This is part of the EU’s broader updated Chips Act, which aims to enhance supply chain resilience across the bloc.

The requirement applies as of 2025, meaning automakers are expected to begin restructuring their procurement strategies immediately.

The cost of resilience

Automakers will almost certainly face higher operational costs as they onboard secondary suppliers. Short-term disruptions to European car production remain a real possibility.

For investors watching the semiconductor space, established alternative suppliers like Infineon, STMicroelectronics, and NXP Semiconductors could see increased demand as automakers scramble to comply.

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