diff --git a/pkgs/os-specific/linux/device-tree/apply_overlays.py b/pkgs/os-specific/linux/device-tree/apply_overlays.py
new file mode 100644
index 000000000000..307c00fa7863
--- /dev/null
+++ b/pkgs/os-specific/linux/device-tree/apply_overlays.py
@@ -0,0 +1,102 @@
+from argparse import ArgumentParser
+from dataclasses import dataclass
+from functools import cached_property
+import json
+from pathlib import Path
+
+from libfdt import Fdt, FdtException, FDT_ERR_NOSPACE, fdt_overlay_apply
+
+
+@dataclass
+class Overlay:
+    name: str
+    filter: str
+    dtbo_file: Path
+
+    @cached_property
+    def fdt(self):
+        with self.dtbo_file.open("rb") as fd:
+            return Fdt(fd.read())
+
+    @cached_property
+    def compatible(self):
+        return get_compatible(self.fdt)
+
+
+def get_compatible(fdt):
+    root_offset = fdt.path_offset("/")
+    return set(fdt.getprop(root_offset, "compatible").as_stringlist())
+
+
+def apply_overlay(dt: Fdt, dto: Fdt) -> Fdt:
+    while True:
+        # we need to copy the buffers because they can be left in an inconsistent state
+        # if the operation fails (ref: fdtoverlay source)
+        result = dt.as_bytearray().copy()
+        err = fdt_overlay_apply(result, dto.as_bytearray().copy())
+
+        if err == 0:
+            new_dt = Fdt(result)
+            # trim the extra space from the final tree
+            new_dt.pack()
+            return new_dt
+
+        if err == -FDT_ERR_NOSPACE:
+            # not enough space, add some blank space and try again
+            # magic number of more space taken from fdtoverlay
+            dt.resize(dt.totalsize() + 65536)
+            continue
+
+        raise FdtException(err)
+
+def main():
+    parser = ArgumentParser(description='Apply a list of overlays to a directory of device trees')
+    parser.add_argument("--source", type=Path, help="Source directory")
+    parser.add_argument("--destination", type=Path, help="Destination directory")
+    parser.add_argument("--overlays", type=Path, help="JSON file with overlay descriptions")
+    args = parser.parse_args()
+
+    source: Path = args.source
+    destination: Path = args.destination
+    overlays: Path = args.overlays
+
+    with overlays.open() as fd:
+        overlays_data = [
+            Overlay(
+                name=item["name"],
+                filter=item["filter"],
+                dtbo_file=Path(item["dtboFile"]),
+            )
+            for item in json.load(fd)
+        ]
+
+    for source_dt in source.glob("**/*.dtb"):
+        rel_path = source_dt.relative_to(source)
+
+        print(f"Processing source device tree {rel_path}...")
+        with source_dt.open("rb") as fd:
+            dt = Fdt(fd.read())
+
+        dt_compatible = get_compatible(dt)
+
+        for overlay in overlays_data:
+            if overlay.filter and overlay.filter not in str(rel_path):
+                print(f"  Skipping overlay {overlay.name}: filter does not match")
+                continue
+
+            if not overlay.compatible.intersection(dt_compatible):
+                print(f"  Skipping overlay {overlay.name}: {overlay.compatible} is incompatible with {dt_compatible}")
+                continue
+
+            print(f"  Applying overlay {overlay.name}")
+            dt = apply_overlay(dt, overlay.fdt)
+
+        print(f"Saving final device tree {rel_path}...")
+        dest_path = destination / rel_path
+        dest_path.parent.mkdir(parents=True, exist_ok=True)
+        with dest_path.open("wb") as fd:
+            fd.write(dt.as_bytearray())
+
+
+if __name__ == '__main__':
+    main()
diff --git a/pkgs/os-specific/linux/device-tree/default.nix b/pkgs/os-specific/linux/device-tree/default.nix
index 87c9b84e1240..b8c71cc5a8ae 100644
--- a/pkgs/os-specific/linux/device-tree/default.nix
+++ b/pkgs/os-specific/linux/device-tree/default.nix
@@ -1,4 +1,4 @@
-{ lib, stdenv, stdenvNoCC, dtc }:
+{ lib, stdenv, stdenvNoCC, dtc, writers, python3 }:
 
 {
   # Compile single Device Tree overlay source
@@ -26,41 +26,11 @@
 
   applyOverlays = (base: overlays': stdenvNoCC.mkDerivation {
     name = "device-tree-overlays";
-    nativeBuildInputs = [ dtc ];
-    buildCommand = let
-      overlays = lib.toList overlays';
-    in ''
-      mkdir -p $out
-      cd "${base}"
-      find -L . -type f -name '*.dtb' -print0 \
-        | xargs -0 cp -v --no-preserve=mode --target-directory "$out" --parents
-
-      for dtb in $(find "$out" -type f -name '*.dtb'); do
-        dtbCompat=$(fdtget -t s "$dtb" / compatible 2>/dev/null || true)
-        # skip files without `compatible` string
-        test -z "$dtbCompat" && continue
-
-        ${lib.flip (lib.concatMapStringsSep "\n") overlays (o: ''
-        overlayCompat="$(fdtget -t s "${o.dtboFile}" / compatible)"
-
-        # skip incompatible and non-matching overlays
-        if [[ ! "$dtbCompat" =~ "$overlayCompat" ]]; then
-          echo "Skipping overlay ${o.name}: incompatible with $(basename "$dtb")"
-        elif ${if (o.filter == null) then "false" else ''
-          [[ "''${dtb//${o.filter}/}" ==  "$dtb" ]]
-        ''}
-        then
-          echo "Skipping overlay ${o.name}: filter does not match $(basename "$dtb")"
-        else
-          echo -n "Applying overlay ${o.name} to $(basename "$dtb")... "
-          mv "$dtb"{,.in}
-          fdtoverlay -o "$dtb" -i "$dtb.in" "${o.dtboFile}"
-          echo "ok"
-          rm "$dtb.in"
-        fi
-        '')}
-
-      done
+    nativeBuildInputs = [
+      (python3.pythonOnBuildForHost.withPackages(ps: [ps.libfdt]))
+    ];
+    buildCommand = ''
+      python ${./apply_overlays.py} --source ${base} --destination $out --overlays ${writers.writeJSON "overlays.json" overlays'}
     '';
   });
 }