What the Nexperia Crisis Means for the Global Supply Chain, With Z2Data CEO Mohammad Ahmad

The Nexperia ownership dispute has seized headlines over the past three weeks, as the Dutch chip manufacturer continues to be embroiled in a struggle between China and the Netherlands. After the Dutch government attempted to seize control of Nexperia using the nation’s Goods Availability Act, China’s Ministry of Commerce struck back by imposing export controls on Nexperia factories in China, where most of the company’s manufacturing is based. That retaliatory measure has now led to an impending supply chain crisis, as major original equipment manufacturers (OEMs) that rely on Nexperia’s chips are facing sudden shortages and the prospect of production shutdowns. 

As of late October, large manufacturers like Volkswagen, Volvo, Toyota, and Honda are still navigating the supply chain fallout from this international power struggle, while smaller companies without the same global name recognition grapple with similar sourcing challenges. 

We sat down with Z2Data CEO Mohammad Ahmad to discuss these developments and the unique circumstances surrounding them, and Ahmad shared his insights on this new looming semiconductor shortage.  

Q: In addition to the automotive industry, who else is affected by this Nexperia incident?

Ahmad: Any industry that uses semiconductors is likely impacted by this to some extent. Nexperia is a major player in the realm of MOSFETs and ICS power management, which makes them crucial for a lot of supply chains. 

Nexperia sells thousands of products, so this crisis affects more industries beyond automotive, although that’s the one we’re hearing the most about right now.  

Q: Do you think that this whole crisis is going to have any long-term impacts on supply chains and/or how companies source their parts? 

Ahmad: Absolutely. I think it is opening people’s eyes up to the need to have your supply chains mapped. What that means is knowing who your suppliers are, the parts they supply to you, and where those parts are manufactured. You need all three to begin developing a clear picture of the potential risks you could be facing. 

I also think this incident will push companies to more thoroughly assess a supplier’s risk before sourcing parts from them. Supplier vetting will be an even more critical part of the risk management process.‍

Q: Have there been any similar examples of supply chain chokepoints like this in the past?

Ahmad: I want to start by saying I don’t see this incident as an industry chokepoint. When a chokepoint happens, it typically means there is no alternative solution available. For example, I think about the Spruce mine incident in North Carolina last year. Or China’s rare earth restrictions. Those are events where if access to minerals or a key producer in the product lifecycle is lost, there is no alternative available. That’s it.

Nexperia isn’t an industry-level chokepoint because there are alternative parts available from qualified suppliers. However, it has the potential to be a chokepoint on a company level if a company hasn’t taken the necessary steps to mitigate their dependencies on Nexperia.

How bad that chokepoint is really depends on how much a company knows their own supply chain. If they’ve been proactive and taken steps to find alternative, qualified suppliers and parts, then the number of steps they need to take is far less than a company that hasn’t prepared any of that. Especially one who doesn’t even know how Nexperia parts are being used used in their current product lines. 

Q: How bad do you think this event is for companies who are dependent on Nexperia?

Ahmad: It really depends on if the company has set up their internal process and systems to be able to address these kinds of issues. One thing I want to clarify is that even the most proactive company will still have to take action to address their dependency on Nexperia. No company can avoid having to respond to this incident. 

But the speed and confidence with which they can make decisions is dramatically different depending on what actions they took beforehand. 

If a company was proactive and took steps like centralizing all their data, mapping out their supply chain, and looking for alternatives ahead of time, it won’t be difficult for them to assess the impact and answer questions like, “What do I have in stock? What do I need to buy? What do I have qualified as alternatives? How can I manage the situation?”

At Z2Data, we actually had a customer tell us, “I was able to sleep tonight because I already knew the potential impact of the Nexperia crisis thanks to your tool.” They had the information they needed to take action to mitigate the potential impact to their supply chain. 

For companies who haven’t done this, they’re probably in a tough spot. They’re asking questions like, “Where’s my gap? What do I need to cover? Do I have other alternatives?” They’re probably focused on scrambling for supply. Which won’t be easy. 

Q: Why won’t that be easy?

Ahmad: Our data indicates that brokers went in very quickly and bought up Nexperia stock. It’s the nature of the game. They know that by the time you figure out what your impact is and how you want to do things, you may be desperate. 

Q: Given all this, what can companies currently do to mitigate the situation? 

Ahmad: First of all, companies need to know where their potential impact is. Identify the gaps, starting with the most critical parts on your most important product lines, then take necessary actions for each one of those gaps. 

One thing companies can do now if they haven’t already is assess their stock levels. They need to know how much they have on hand they can lean on. That will inform them how much time they have to search for alternatives.

Next should be leaning on alternatives from pre-qualified suppliers. If you don’t have those, you’ll need to start looking for alternatives as quickly as possible. It takes months to qualify suppliers but in incidents like these you may not have the luxury of time, especially if you’ve been caught off guard.

Redesign is always the last option. But companies that take action and have a head start of two to three days, for them that’s a huge win. And their ability to react quickly depends on how proactive they were.

Q:  What can companies do to put themselves in an advantageous position to respond to these kinds of supply chain threats?  

Ahmad: The number one thing they can do is pursue true supply chain visibility. To me, that doesn’t mean just mapping site locations but also understanding who my suppliers are, knowing their ownership structures, and knowing where they are manufacturing my parts. 

On a component level, supply chain visibility should enable a company to know where their parts are manufactured, if they have alternatives available and who supplies them, and if there are any chokepoints in those links. 

It’s not just knowing the individual pieces of information—it’s understanding how they’re all interconnected. The relationships between your suppliers, your parts, manufacturing locations, etc. For example, you don’t want to choose an alternative supplier for a critical part only to find out they’re actually a subsidiary of your primary supplier. 

Knowledge with context is the key foundation for handling issues like the Nexperia crisis. 

Q: Could Nexperia’s customers have seen this coming?

Ahmad: I think so. If you look at the timeline of what happened, we know that Wingtech bought Nexperia in 2018. When it did, nobody saw issues. It was during the real early stages of this trade war between the U.S. and China. 

But last year, Wingtech was put on the BIS Entity List. And earlier this year, the U.S. was already talking about the 50% rule. As early as April and June, there were murmurs and rumors. Even our customers were asking us about it. A company that knew their dependencies on Nexperia, if they were paying attention to the news, could have easily assessed their risk before any of this and then been prepared when the BIS Affiliates Rule became official. 

Q: Closing thoughts?

Ahmad: Uncertainties will always exist. And if you want to survive today and next year and ten years from now, you need to anticipate more of them, not less. 

The Nexperia situation is unfortunate, but I doubt this will be the last time something like this happens. The number of risks supply chains face are growing, and companies need to account for that by rethinking their risk management strategy with visibility as a priority. 

I think there are a lot of ways to do this, but the most important step to take is having a strong data foundation. At Z2Data, we help companies do that by integrating their data with our comprehensive database in one centralized platform. Our database provides them with real-time insights on suppliers, parts, and manufacturing sites, so they have the visibility they need to identify and mitigate risks like Nexperia, ideally before they cause disruption. 

With our tool, things like knowing which companies are on or have been recently added to the BIS Entity List, which parts in your BOM are impacted by a sanctioned supplier, and what alternatives are available from others can be found in a matter of minutes, instead of weeks or months.