EU, US production braces for fresh chip crisis

EUROPEAN and American automotive manufacturers are bracing for a new round of microprocessor driven production interruptions fuelled by China’s ban on the exportation of crucial Nexperia semiconductors.

Chip shortages are expected to impact the industry on two continents within a week, spreading across the entire sector within 10 to 20 days.

“The situation could lead to significant production restrictions, possibly even production stoppages in the near future,” said German Association of Automotive Industry president Hildegard Muller.

Beijing has blocked Nexperia – a Dutch microprocessor manufacturer owned by China’s Wingtech Technology Co – from exporting products made at its Chinese plants.

The move came after the Dutch government seized control of the company under emergency laws meant to safeguard strategic production.

Chinese commerce minister Wang Wentao warned that the Netherlands’ move to take control of Nexperia has “seriously affected” the stability of the global microprocessor supply chain.

The Dutch government said it would remain in contact with Chinese authorities to work “toward a constructive solution”.

The latest chip ban has escalated a broader trade dispute as China and the US prepare for high-level talks later in the month. It follows Beijing’s measures to tighten exports of rare earths and battery materials critical to electric vehicles.

Automotive manufacturers and their suppliers are in crisis talks with government officials to map out contingency plans but have warned that sourcing and qualifying replacement components will take months, not days.

Automotive News Europe and Reuters have independently reported that the fallout from China’s latest chip ban will extend beyond the EU, with US manufacturers also exposed via smaller components and electronics that rely on Nexperia chips.

US automotive producers say they were “blindsided” by the Dutch government’s move to take control of Nexperia after pressure from Washington.

German chipmaker Infineon Technologies, one of the main suppliers to the auto industry, has been fielding inquiries from manufacturers seeking alternative sources of components, Bloomberg reported last week.

While initially caught off guard, automotive manufacturers and suppliers have now opened channels with Chinese authorities as well as officials in the Netherlands and the European Commission, according to people familiar with the talks.

The outreach aims to clarify the scope of the export controls and explore ways to ease the impact before production lines are forced to stop.