On Wednesday, German automotive behemoth Volkswagen issued a warning, stating that the company might encounter temporary production halts as a result of China's export restrictions on semiconductors manufactured by Nexperia.

Earlier, the German Association of the Automotive Industry (VDA), which serves as the principal lobbying entity for the German automotive sector, had indicated that if the chip supply disruption issue isn't swiftly resolved, the conflict between China and the Netherlands regarding Nexperia could trigger severe limitations on automotive production in the foreseeable future.

A Volkswagen spokesperson clarified that while Nexperia isn't a direct supplier to Volkswagen, Nexperia components are incorporated into parts supplied by Volkswagen's direct suppliers. At present, Volkswagen's production remains unscathed, yet the potential for short-term disruptions in the future cannot be entirely dismissed.

Previously, the Dutch government assumed control over Nexperia, a semiconductor manufacturer with Chinese ownership and its headquarters in the Netherlands. This move was driven by concerns that its technology might not be accessible during emergencies. Subsequently, China imposed a ban on the export of finished products from the company, sending shockwaves through the European automotive industry.