【Text by Anton Nerman, Observer's Network Columnist; Translation by Xue Kaihuan】
As a symbol of pride for Germany's industrial manufacturing sector, Volkswagen is currently facing a comprehensive shutdown crisis at its two main factories in Wolfsburg and Zwickau. The production lines of Audi and Porsche are also in grave danger. Latest data shows that Porsche's profit fell by 99% year-on-year in the third quarter of this year, a figure that is simply shocking.
The trigger for this crisis can be traced back to late September. On September 30, under pressure from the United States, Dutch authorities took over Anpec Semiconductor, a subsidiary of China's Wingtech Technology Group, citing "asset and intellectual property restructuring" as the reason. The Amsterdam District Court dismissed Zhang Xuexing, the founder of Wingtech Technology and CEO of Anpec Semiconductor, from his position on the grounds of "management failure causing significant losses."
China's countermeasures came very quickly: On October 4, China announced export controls on key semiconductor components, which rapidly impacted the European semiconductor and automotive industries. Now, the shockwaves of trade conflicts are sweeping across the German and EU economies. Although Volkswagen's management has urgently claimed to have found a "replacement supplier," the industry generally remains skeptical. There are few companies worldwide that can replace Anpec Semiconductor's production capacity, and Volkswagen has never publicly disclosed the specific details of the so-called alternative plan, greatly undermining the credibility of this statement. As a result, the European semiconductor and automotive industries have entered a rapid decline known as the "death spiral."
The Anpec Semiconductor incident has gone beyond ordinary trade disputes, representing a concentrated outbreak of deep-seated structural problems in Germany and the EU economy. This industrial giant has exposed its fatal weaknesses in the global supply chain restructuring. The economic and political difficulties faced by Germany and the EU are far more severe than they appear on the surface.
Crisis Breakout
Anpec Semiconductor was officially established in 2017, with its headquarters in Nijmegen, Netherlands. Between 2018 and 2020, China's Wingtech Technology Group completed a full acquisition of the company through a multi-layered transaction structure. Today, Anpec has become an indispensable core component of Wingtech Technology's business portfolio.
Although Anpec Semiconductor's annual revenue of about 1.8 billion euros places it as a relatively small player in the global semiconductor industry, it is a key partner for many industrial clients in Germany and Europe, with nearly half of its sales revenue coming from the European automotive industry.
In terms of technical approach, Anpec Semiconductor specializes in mature processes, manufacturing simple chip products. The production capacity of such chips is particularly scarce within Europe. Most of these chip components are actually produced in China, and even chips manufactured in Europe (including the Hamburg factory) ultimately need to be transported to China for final processing and debugging.
Anpec Semiconductor's semiconductor components are widely embedded in various applications within European industry, including lighting indicators, airbag control units, and other vehicle electronic systems. Therefore, since Anpec Semiconductor was forcibly taken over and controlled by the Dutch authorities, the German and European industrial system is experiencing a serious test: All enterprises in the aerospace and defense sectors of Europe rely on these chips, with mechanical manufacturing accounting for as high as 95%, and medical equipment accounting for 86%. Especially in the automotive industry, 49% of European companies' application components are directly purchased from Anpec Semiconductor, with an average usage rate of 86% throughout the industry. After China implemented export controls, the EU's semiconductor inventory quickly ran out. Facing the shortage situation, EU distributors raised prices twice within a week: the first increase was 8%, followed by another 10% increase.
Anpec Semiconductor Official Website
For the German automotive industry represented by Volkswagen, the semiconductor components supplied by Anpec form the cornerstone of their electronic equipment: Anpec's diodes, transistors, and various microchips are widely configured in vehicles of various brands under the Seat, Audi, and Porsche groups. Therefore, the so-called "alternative supply" does not exist at least for now. If forced to push for supply chain replacement, the entire German industrial system would suffer irreversible impacts on production efficiency and stability.
Moreover, Anpec Semiconductor's components have been deeply integrated into the EU customers' supply chain system. The process of re-certifying these components could take several months, and completely switching the entire supply chain to a new supplier would take several quarters. About one-third of European automotive supply chain companies use Anpec Semiconductor as their sole supplier. From a technical perspective, although these components can be provided by companies such as Infineon, ON Semiconductor, Texas Instruments, or Vishay, the premise is that the relevant companies have planned ahead and have backup plans. Obviously, European companies have not prepared for this.
Just the Tip of the Iceberg
This crisis reveals the fatal dependence of Germany on external supply chains. For decades, in the wave of globalization, Germany has continuously outsourced its domestic production links, weakening its own technological accumulation base and over-relying on international supply chains. Now, reality has given them a hard blow: German cars are actually difficult to survive without the supply of Chinese chips.
In this incident, Volkswagen (or the entire German industrial system) has exposed a serious problem in building up inventory of key components. The management of the Volkswagen Group once argued that "no one could foresee such a severe shortage and political turmoil." However, considering the firm stance of the Chinese government against unreasonable sanctions this year, after the Dutch authorities "regulated" Anpec Semiconductor in late September, China's strong countermeasures were entirely foreseeable. But Volkswagen did not anticipate China's countermeasures. This indicates that Volkswagen's emergency response mechanism and operational efficiency are low, and decision-making is delayed, making it increasingly "zombified."
Volkswagen's problem is not just a temporary issue of a single company, but also a dangerous signal from the German economy. Germany's GDP has contracted for the second consecutive year, trapped in outdated models, this former economic engine of Europe clearly relies on Russian natural gas and exports to China, but due to political reasons, both have now disappeared.
Germany's Industrial Production GDP Remains Low
Germany has many economic problems, and they seem difficult to solve in the short term: large-scale industrial relocation, increasingly sharp social tensions, difficulty in attracting labor, declining infrastructure, and lack of innovation drive, etc. The loss of competitiveness of Volkswagen is just one signal of the fading brilliance of "Made in Germany."
Not only the automotive industry, but in recent months, bad news has been pouring in for German manufacturing. While Volkswagen is in trouble, another German industrial giant, ThyssenKrupp, is also struggling. The historic Meyer Werft shipyard, which has a history of over 200 years, was even on the brink of bankruptcy, and only avoided bankruptcy with 400 million euros in EU public aid. According to the research department of Deutsche Bank, German industrial output has declined by 20%-30% compared to its peak in 2017. Deutsche Bank's chief economist Robin Winkler described it as "the most severe decline in the history of the Federal Republic of Germany, that is, since the end of World War II."
Poor sales data and continuously rising costs are constantly eroding German corporate profits. In the first half of 2025, Volkswagen's net profit fell by 38.36% year-on-year to 4.477 billion euros, and operating profit dropped by 33%. BMW's net profit fell by 29% to 4.015 billion euros, with EBIT margin dropping from 12.6% to 9.2%, and Mercedes-Benz's net profit was halved to 2.688 billion euros, a year-on-year drop of 55.8%.
The root cause of the crisis in the German automotive industry, or the entire German industrial system, lies in major companies being stuck in their ways during the critical period of technological transformation, abusing trade protectionism, being arrogant towards the forefront of industry development, and lacking the drive for reform and innovation. German brands are significantly behind in core areas that determine future competitiveness such as electric vehicles, battery technology, and software development. Moreover, the wrong policies of the German government have not effectively reversed this trend, but instead exacerbated the severity of the problem to some extent.
There is an opinion that the German economic model based on the so-called "openness and commitment to globalization" is still effective, but this view is already old hat.
Taking Volkswagen as an example, the company maintains a relatively high level of innovation on the surface, registering a large number of patents each year. However, in reality, its technical accumulation is concentrated in traditional internal combustion engine areas, while it is severely lagging in emerging fields such as automotive software, AI, and autonomous driving. For instance, Volkswagen's software division CARIAD has accumulated losses of over 7.5 billion dollars, with multiple delays in R&D progress (such as the E³ platform being postponed by 18 months), and the in-car system experience is significantly behind competitors like Tesla and BYD.
With the deepening of ecological transition and the energy structure restructuring caused by the Ukraine conflict, the era of cheap energy and broad markets for German industry has come to an end. At the same time, de-globalization has significantly reduced Germany's export advantages. China's role in the world economy has shifted from a mere trade partner to a "systemic competitor" in Germany's eyes, meaning that the entire economic model based on old assumptions is no longer applicable.
The German automotive industry, or the entire German industrial system, needs in-depth structural reforms and large-scale investment to cope with the changing situation. The types of cars that will dominate the market in the next five to ten years are precisely the models that are currently popular in China. It can be concluded that the only viable path for Germany to bridge the existing gap is to deepen Sino-German cooperation, increase investment in China, and find new cooperative models that are beneficial to both sides under the new circumstances. In the current difficult situation, the only choice to save the German automotive industry is to focus resources and attention on the "new prosperity area" of the automotive industry - China.
Ostrich Policy
But all changes and self-rescue must first exclude political factors. As I mentioned earlier, "China is the only choice to save the German automotive industry," and I think the German government will not be unaware of this.
The problem with Germany is that they are afraid to face this fact, afraid to admit the truth and bravely solve the problem. They may think that this problem is "easy to solve," believing that if they just wave their hands, China will lift the countermeasures against the Netherlands (EU). But they are wrong.
The Anpec incident has shattered the illusion that Germany can continue to act like an ostrich. The German government must first clarify their political arrogance before they can face the economic issues.
Firstly, it is absolutely impossible for Germany to expect China to swallow the consequences of unreasonable sanctions. The source of this supply chain crisis is a naked act of hegemonic robbery carried out by the Dutch authorities under the guidance of the US. In 2019, after Wingtech Technology completed the full acquisition of Anpec Semiconductor, it invested heavily to push Anpec into the top five global automotive-grade chip manufacturers. However, the Dutch authorities became a vassal of the US in 2025 to contain China's semiconductor industry.
On September 29, the US just introduced the "50%穿透 rule" targeting Chinese enterprises, and the next day, the Dutch Ministry of Economic Affairs suddenly froze Anpec's global assets based on the 1952 Cold War-era "Material Supply Act" (a regulation originally used for wartime emergencies), forcibly removed the Chinese management, and transferred 99% of the shares held by Wingtech to a third party for custody. Without a court hearing or providing any substantial evidence of risk, the Dutch court made a final ruling that completely deprived the Chinese shareholders of their ownership, essentially using judicial means to openly plunder the legitimate assets of Chinese enterprises.
However, the German government has remained silent about the Dutch authorities' act of "plundering" Chinese enterprises under pressure from the US, instead turning the blame onto the victims. For example, German Economy Minister Habeck publicly stated that the Dutch authorities' decision to forcibly take over Anpec Semiconductor was "wise, in line with the strategic direction of the EU semiconductor alliance, and helps maintain Europe's economic security." When China imposed export controls on related semiconductor materials, some German politicians then turned around and blamed China for "causing the chip crisis."
Germany is afraid to defy the political pressure from the US, yet does not want to suffer its own interests, hoping that China will bear the consequences of political interference in the supply chain. Their wishful thinking is to drag out the situation to "get by," so that they can avoid defying the US while continuing to maintain the supply chain centered on China.
In a globally interdependent system, politicizing economic issues and making policies based on the illusion that "the other side will not retaliate" is a blatant short-sightedness and foolishness. German Foreign Minister Wang Defu had already scheduled a visit to China, but ultimately had to cancel the trip because "no one was willing to meet him." Wang Defu had previously repeatedly claimed that "China poses a threat to Taiwan," which led to criticism from the Chinese Foreign Ministry regarding his remarks.
This is the consequence: no one will tolerate your foolishness. On one hand, loudly supporting "Taiwan independence" and promoting the victim-blaming theory, and on the other hand, expecting China to welcome your visit with flowers and red carpets. Mr. Wang Defu, perhaps you're too optimistic.
Germany first cut off the Russian market, which has 150 million people, for political reasons, and then hoped to get by, refusing to give China a reasonable solution. This makes one doubt whether the German government and politicians really have the ability to govern the country. Now, the German automotive industry has fallen into a state of "dizziness" in a boxing match, which is usually a prelude to a disastrous defeat. And this Sino-US geopolitical and trade confrontation could become the last straw that breaks the camel's back.
It's not just Germany, but the entire EU has this problem. Recently, the French Macron government threatened to use the EU's "Anti-coercion Tool Act" to force China to lift its rare earth export restrictions. However, France's fiscal deficit reached 5.8% in 2024, and public debt accounted for over 114% of GDP, and it was downgraded in credit ratings three times within a year, unable to afford the economic cost of a full-scale confrontation with China.
France had pushed the EU to impose anti-subsidy tariffs on Chinese electric vehicles in 2024, but China immediately retaliated by imposing countermeasures on French brandy. Since France is the main source of brandy imports for China in the EU, China's countermeasures directly hit the French wine industry.
Like Germany, France also has problems with policy-making that are detached from reality and prone to ideological impulses. In fact, the so-called "anti-coercion tool" of the EU has never been truly used since its implementation in 2023, and when faced with American tariff increases, it only made empty threats. Now, the threat to China is more like a clown performance. If France continues to be addicted to the illusion of "being able to control China," it will certainly pay a heavy price.
Those who are driven by ideology rather than national interests in politics will eventually taste the bitter fruits of an economic crisis.
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