A fresh semiconductor (chip) crunch is now looming, and this time Covid-19 is not the trigger. Trade friction between the United States and China is putting strain on automotive supply chains, and the first effects are already starting to show.
At the centre of the latest disruption is Nexperia, a Dutch chipmaker controlled by China’s Wingtech. Around 60% of Nexperia’s output is sold to the automotive sector, yet its ability to supply car manufacturers is increasingly constrained.
What is driving the looming chip shortage?
The ACEA (European Automobile Manufacturers’ Association) said it has been informed that Nexperia’s deliveries into the automotive supply chain cannot currently be assured. “Car manufacturers and their suppliers have received a notification from Nexperia describing a sequence of events that prevents them from guaranteeing delivery of their chips to the automotive supply chain,” ACEA said in a statement. By way of context, the Dutch company produces hundreds of millions of chips each year.
ACEA warned that the knock-on effects could arrive quickly. “Without these chips, European automotive suppliers cannot manufacture the parts and components needed to supply manufacturers, threatening to interrupt production. Current stock of Nexperia chips is expected to last only a few weeks,” the association added. If essential parts become unavailable, factories could be forced to halt and delivery lead times may lengthen.
Why Nexperia chips matter for carmakers
While Nexperia’s chips are not seen as cutting-edge - they are not the same type used in autonomous vehicles - they are used in a wide range of core vehicle functions, from lighting to electronic control units.
“Suddenly, we find ourselves in this alarming situation. We really need quick and pragmatic solutions from all the countries involved.”
Sigrid de Vries, Director-General of ACEA
In the United States, the Alliance for Automotive Innovation also cautioned that any chip shortfall could rapidly affect not only vehicle production, but other sectors as well.
Impact on manufacturers
Vehicle manufacturers and their suppliers are closely tracking developments around Nexperia to gauge how far this situation could escalate.
How BMW, Mercedes-Benz, Volkswagen, Stellantis, Renault and Bosch are responding
One of the first manufacturers to confirm that part of its supply network is being affected was BMW, although it has not yet resulted in production stoppages, Automotive News Europe reported. Mercedes-Benz did not confirm whether the Dutch company is within its supplier network, but said it is in contact with the relevant parties.
The Volkswagen Group is assessing impacts on suppliers and components, as some Nexperia chips reach its vehicles indirectly. Stellantis said it is working with the company and other suppliers to evaluate the implications and to plan mitigation measures.
Renault said it is monitoring the situation, but that it is still too early to make a definitive statement. Bosch confirmed that Nexperia is one of its electronic component suppliers and said it is working to minimise any potential impact.
According to ACEA, “although the industry already buys the same types of chips from other competitors in the market, approving new suppliers for specific components and ramping up production takes several months”; a timeline the association considers unrealistic, given that current Nexperia chip stock is expected to last only a few more weeks.
Even where manufacturers have diversified their supplier base, replacing Nexperia’s specific chips remains difficult due to the technology involved, the limited number of alternative suppliers, and demanding certification requirements.
Next steps
Last week, the Dutch Government said it had begun talks with China aimed at lifting export controls affecting Nexperia. The economy minister, Vincent Karremans, said on 19 October (yesterday) that he expected to meet a Chinese representative in the coming days to resolve the deadlock.
A meeting between Donald Trump, President of the United States, and Xi Jinping, President of the People’s Republic of China, scheduled for this month in South Korea could also reshape the trade climate between Washington and Beijing. However, uncertainty remains over whether the meeting will go ahead amid rising tensions, with some forecasts suggesting it may not take place until next year.
“ACEA is deeply concerned about the potential significant disruption to European vehicle production if the disruption to the supply of Nexperia chips is not resolved immediately,” the association concluded.
Comments
No comments yet. Be the first to comment!
Leave a Comment