On paper, the outlook is bright: according to McKinsey, the global automotive electronics and software market is expected to reach 519 billion USD by 2035. In reality, OEMs and suppliers are struggling to secure exactly the chips their products depend on most. This article explains what is driving these structural shortages – and what European decision-makers can do about it.
A political decision, a production stop
In October 2025, the Dutch government forced a change of control at Nexperia, a major European chip manufacturer owned by China’s Wingtech. Beijing reacted immediately and halted exports. What sounded like a political dispute between two countries became, within days, a very real production problem for European OEMs such as Volkswagen, BMW and several Japanese brands building in Europe.
Standard chips, not high-end compute
The reason was simple: Nexperia supplies around 40% of the so‑called “standard chips” used in automotive applications worldwide – small, inexpensive components that control braking systems, window lifters or power distribution. They are not high‑performance processors, but without them, vehicles do not leave the line. And they cannot be switched overnight, because qualifying alternative sources in automotive typically takes months.
A symptom of a deeper structural problem
China eased the export ban partially in November 2025, but the underlying conflict remains unresolved. Wingtech continues to push for full control, while European policymakers are still debating how to balance security concerns with industrial reality. For companies that felt “safe” once deliveries resumed, the uncomfortable truth is this: the dependency has not gone away. It is a symptom of a structural problem that will shape the next chip crisis – and it will look very different from the last one.
Legacy Nodes: The Hidden Bottleneck
Growth on paper, bottlenecks in reality
McKinsey expects the global market for automotive software and electronics to grow from 336 billion USD in 2025 to 519 billion USD by 2035 – around 4.5% per year. Software, ADAS and power electronics for electric vehicles are the main growth engines. While investment and board attention focus on these “shiny” topics, the structural risk sits elsewhere.
Why mature nodes matter more than 3 nm
The real bottleneck is in mature‑node, or legacy, chips – the components manufactured on 40–180 nm processes that power microcontrollers, analog ICs and power management. These devices handle high voltages, drive motors and read sensors. They cannot simply be replaced by cutting‑edge 3 nm processors, and for most automotive, industrial and medical use cases, they remain the most economical and robust option.
A structural mismatch with real production impact
Demand for these mature‑node chips is growing at double‑digit rates across automotive, industrial automation and connected medical devices. At the same time, foundry capacity in this range is expanding only slowly, because most capital expenditure is flowing into leading‑edge nodes for smartphones and AI data centers. The result is a structural mismatch: demand growth significantly outpaces capacity growth in exactly the technologies Europe depends on most.
Analysts already warn that this gap could translate into hundreds of thousands of vehicles not being built in the coming years – not because of missing high‑end compute, but because of missing “everyday” components. And memory tells a similar story, as one concrete example shows.
The DDR4 countdown: a concrete example
DDR4 and LPDDR4 DRAM – the standard memory in many cockpit and ADAS designs – are being phased out. Micron has issued end‑of‑life notices and plans to stop mainstream DDR4 and LPDDR4 shipments around early 2026, while Samsung and SK hynix are winding down high‑volume DDR4 production between late 2025 and 2026. Capacity and investment are shifting to DDR5 and HBM to feed AI data centers, because that is where margins are highest.
For European OEMs and Tier‑1s, the timing is difficult. Many vehicle platforms planned for 2027–2029 are still based on DDR4/LPDDR4 architectures. Migrating to DDR5/LPDDR5 requires silicon changes, new qualification cycles and full PPAP – a process that easily takes 18–36 months in automotive. The industry is, in effect, running a race against a ticking clock.
Price signals already reflect the stress. Spot prices for DDR4 have roughly doubled since mid‑2025, and in some cases older modules are more expensive than newer technologies because they are produced only on residual capacity. At the same time, DRAM makers are clear that continuing support for legacy parts means limited volumes at “appropriate prices”, not growth‑scale supply.
The memory example shows how structural underinvestment in mature technologies translates into very practical risks for ongoing and future vehicle programmes.
What European Companies Are Up Against
A global deal with European side-effects
On top of these capacity issues, geopolitical shifts add an extra layer of pressure for European supply chains. The new trade agreement between the US and Taiwan offers Taiwanese chipmakers lower tariffs and preferential treatment in exchange for substantial investments in US manufacturing capacity. In practice, this means that a growing share of Taiwan’s output – which already accounts for more than 60% of global semiconductor foundry capacity – will be tied more closely to US demand and policy priorities. For European OEMs and Tier suppliers, that translates into a structural disadvantage. Even if overall global capacity increases over time, the first call on that capacity will often sit with US customers and AI data‑center demand, not with European automotive or industrial users.
Investing in the wrong chips
The second challenge is that most new capacity is going into the wrong kind of chips – at least from a European perspective. Global and regional subsidy programmes heavily favour leading‑edge nodes for AI, smartphones and high‑performance computing. Yet Europe’s critical industries still rely predominantly on mature nodes in the 40–180 nm range for microcontrollers, analog ICs and power devices. This mismatch is already visible: industry reports point out that Europe had limited manufacturing capacity for mature nodes even before the pandemic and almost no cutting‑edge capacity at all. The EU Chips Act and new fabs in Dresden and elsewhere will help, but most of that output will only arrive towards the end of this decade – too late to materially change the situation in the current cycle.
Why “waiting it out” is not a strategy
The conclusion is uncomfortable, but clear: for European companies, structural semiconductor risk will not disappear once the current upcycle has passed. Mature nodes and legacy memory will remain tight; geopolitical preferences will continue to influence who gets served first; and new European fabs will take years to ramp. For procurement, supply chain and engineering leaders, this means that “waiting for things to normalise” is not a strategy. The question is no longer whether structural shortages will occur – but how well prepared your organisation will be when they do.
Step 1: Create transparency on critical parts
The first step is simple to describe but hard to execute: knowing exactly which components are truly critical for your business. That means mapping which parts sit in which products and platforms, which technologies and nodes they depend on, which suppliers and regions are involved, and how long they will realistically remain available. Most organisations do not have this view across all tiers – and only discover the gaps when a shipment fails or an end‑of‑life notice arrives.
For European OEMs and Tier suppliers, a structured critical‑parts analysis is no longer a “nice to have”. It is the basis for any meaningful discussion about risk, redesign and mitigation.
Step 2: Build strategic inventory – without turning your balance sheet into a warehouse
Once you know which parts are critical, the real challenge is securing them without overreacting. Buying everything in sight creates full shelves but not necessarily stable lines. Targeted strategic inventory for a clearly defined parts list, combined with professional long‑term storage and robust commercial setups, gives you what you actually need: reliable access to components when it matters. That way, stock shifts from cost driver to resilience enabler.
Step 3: Take back control of allocation
Even with transparency and inventory, companies remain vulnerable if they do not have clear rules for how scarce parts are allocated. In many crises, suppliers rely on “fair share” rules or their own strategic priorities to decide who gets what. That often leaves European mid‑tier customers at the back of the queue.
Taking back control means qualifying alternative sources early and defining transparent criteria for which plants, platforms or customers are served first in a shortage – supported, where possible, by dedicated strategic inventory for truly critical parts. In practice, this requires both data (to see the risk early) and robust processes (to implement allocation decisions quickly and consistently).
Taken together, these three steps form the core of an ACT approach to supply chain resilience: Awareness of structural risks and critical parts, Control over stock and allocation, and Transformation of processes and partnerships so that the next crisis hurts less than the last.
From ACT Framework to the Critical Parts Concept by btv technologies
Turning ACT from slides into day‑to‑day practice
Awareness, Control and Transformation are powerful concepts – but only if they move beyond workshop slides. For European manufacturers, the real challenge is operationalising ACT: turning risk maps into concrete stock, contracts and processes that still work under pressure.
This is where a partner like btv technologies comes in. With a focus on component logistics, long‑term storage and service‑based models, btv helps companies create transparency on critical parts, build strategic inventory and design allocation mechanisms that can be executed in days, not weeks.
When preparation is not enough: the role of the Critical Parts Concept
In many organisations, this kind of work is referred to as critical parts management. At btv, it takes a specific form: the Critical Parts Concept by btv technologies.
The idea is straightforward: you define which components are critical, btv executes. That includes sourcing – including from brokers where necessary – incoming inspection, full traceability, storage in line with automotive and IEC standards, and outbound allocation according to your priorities. Parts are prepared so that they are production‑ready, not just “somewhere in the system”.
This becomes particularly important when the crisis you planned for is not the one you get. During the Nexperia shock, for example, many companies bought broker parts at ten times the usual price – only to see them blocked by quality or compliance because documentation, trace data or test results were missing. Money was spent, but no parts made it to the line.
The Critical Parts Concept by btv technologies is designed to break that pattern: broker‑sourced material is verified, documented and stored so that it behaves like factory‑fresh stock; ownership is transferred to you, so you can decide which plants or Tier‑N suppliers are served first; and allocation can be executed in minutes instead of being left to someone else’s “fair share” algorithm.
The uncomfortable reality is that structural semiconductor risks will not disappear. The good news is that companies are not powerless. With an ACT‑based approach and a concrete Critical Parts Concept in place, European manufacturers can move from reacting to the next crisis to actively shaping how it impacts their supply chain.
The obvious questions are: Where do we start, how deep do we need to go—and is it even worth the effort? The following questions and answers provide some initial guidance.
FAQ: Critical Parts Concept by btv technologies
The Critical Parts Concept by btv technologies is a structured approach to critical parts management. You define which components are truly critical for your business; btv handles the execution – from sourcing (including alternative and broker sources), incoming inspection and full traceability, to compliant long‑term storage and outbound allocation according to your priorities. The goal is simple: zero line‑down caused by missing critical parts.
In many traditional setups, the supplier owns the stock and decides, under “fair share” rules, which customers receive how much when shortages hit. That often leaves European plants waiting. With the Critical Parts Concept, ownership of critical parts is transferred to you once they have passed inspection. This means you decide which plants, platforms or Tier‑N suppliers are served first, while btv provides the infrastructure, reporting and logistics to execute your allocation decisions quickly and cleanly.
In recent crises, many companies bought every part they could find on the broker market, often at 5–10x the normal price – and still could not use them because quality, traceability or documentation did not meet automotive standards. Capital was tied up, but no parts reached the line. The Critical Parts Concept is designed to avoid exactly that: critical inventory is built in a targeted way, inspected, fully documented and stored to automotive standards so that every euro you invest in parts can actually be converted into running production when a shortage hits, instead of sitting as unusable stock.
If you decide – or are forced – to source parts from brokers, btv acts as a filter and preparation hub. Broker‑sourced material is inspected, tested where necessary, fully traced and labelled, and then stored under defined conditions. Only once it passes these steps does ownership transfer to you. The result: parts that originally came from the grey market behave like production‑grade inventory, ready for integration into your manufacturing process instead of being stuck in quarantine.
The consequences are measurable.
The question is whether you wait for them to happen or shape them now.
Arrange a meeting with our experts: We will show you
- which components in your supply chain are structurally critical,
- how they can be secured using the Critical Parts Concept,
- and how you can pragmatically implement ACT (Awareness, Control, Transformation) in your organization.
An initial consultation will take 60 minutes – but could prevent weeks of downtime during the next bottleneck.
