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China has banned exports of Nexperia’s finished products, which are widely used in car parts, in response to the Netherlands seizing control of the company.

German car parts supplier Bosch is preparing to furlough staff at its Salzgitter plant if a trade dispute between China and the Netherlands over Dutch chipmaker Nexperia is not resolved soon, amid mounting concerns in Europe’s beleaguered car industry.

Bosch and other suppliers are scrambling for alternatives after China banned exports of Nexperia’s finished products in response to the Netherlands seizing control of the company, whose Chinese owner Wingtech has been flagged by the United States as a possible national security risk.

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Because Nexperia’s chips are widely used in car parts, the standoff risks adding to problems for Europe’s carmaking sector on top of US tariffs and Chinese curbs on rare-earths exports.

“We are currently doing everything we can to serve our customers and avoid or minimise production restrictions,” a Bosch spokesperson said in an emailed statement to the Reuters news agency.

“We have not yet made any adjustments to working hours at our German locations, but are preparing to do so, particularly in Salzgitter,” she said, adding that potential furlough measures were being prepared at the plant.

Salzgitter is Bosch’s lead plant for motor control units for combustion and electric vehicles, and employs about 1,400 staff.

Earlier on Friday, Volkswagen said it had secured production in Germany for the coming work week across the group, which includes the core VW brand and luxury subsidiary Porsche.

“In view of the dynamic situation, however, short-term impacts on the production network of the Volkswagen Group cannot generally be ruled out,” a spokesperson said.

Worsening situation

BMW and Mercedes have also warned that their supplier networks are affected.

A regional representative of Germany’s IG Metall union warned on Friday of a worsening situation.

Some automotive suppliers are already seeing “severe difficulties” and have started to announce furlough schemes for workers, Horst Ott, IG Metall district manager in the southern state of Bavaria, said at an industry event in Munich.

He did not mention any companies by name.

Bosch said it was drawing on alternative suppliers and optimising inventories in its global production network in a bid to prevent production stoppages.

Most Nexperia chips are manufactured in Europe, but packaged in China.

Industry sources say switching suppliers is possible, with Infineon, NXP and Texas Instruments possible alternatives, but this takes time due to approval processes.

Auto industry bodies have called for a political solution.

Dutch Prime Minister Dick Schoof discussed the situation with other European leaders during an EU summit in Brussels this week.