The European automotive industry is beginning to tighten. Manufacturers have received a clear signal that something is not right: Nexperia, one of the main chip suppliers, can no longer guarantee deliveries. Sector associations warn that the room for maneuver is very limited. This is not a technical problem or a strike, but rather the chain effect of an international dispute that threatens to affect the very foundations of a key industry for the Old Continent.
It was on October 16 when the European Automobile Manufacturers Association (ACEA) officially warned of possible production stoppages if the Nexperia supply interruption was not resolved immediately. According to ACEA, the affected chips are used in electronic control units and current inventories will only last a few weeks.
The turning point: a blacklist. At the end of September there was a movement that many in the sector identify as the trigger for the current crisis. The United States Bureau of Industry and Security updated his List of Entities to extend restrictions to subsidiaries controlled by already sanctioned companies. Nexperia, owned by Wingtech, thus fell under the scope of the measures. Since then, tensions have accelerated: The Dutch Government intervened in the company and China responded by blocking the export of certain components.
Now, Nexperia’s role in the automotive industry is less showy than that of the large chip manufacturers, but essential. Its chips are integrated into electronic modules and control units (ECUs) of many of the vehicles produced in Europe. The company, based in the Netherlands and with a strong presence in Asia, is characterized by its volume and reliability. Precisely for this reason, the inability to maintain deliveries has ignited both sides of the supply chain.
The impact in Europe. Initial warnings have been transformed into contingency plans. ACEA calls for a coordinated response between European authorities and the affected countries, aware that the supply chain is going through a delicate point. In Germany, CNBC points outVolkswagen has formed a special team to evaluate possible risks and keep communications open with its suppliers.
One of Nexperia’s facilities in Guangdong
The company tries to gain margin with a new supplier. “We have an alternative supplier that could compensate for Nexperia’s lack of semiconductors,” explained to Handelsblatt Christian Vollmer, responsible for Production of the VW brand. According to the media, conversations with that company have been underway for weeks. Although the discovery gives some oxygen, the transition will not be immediate and the risk of interruptions remains on the table. The group assures that, for now, there is no operational impact, but they admit that the scenario could change in the short term.
The echo crosses the Atlantic. Concern has also reached the United States. The Alliance for Automotive Innovation, which brings together manufacturers such as General Motors, Ford, Toyota and Volkswagen, called for a quick resolution of the conflict. Its CEO, John Bozzella, warned Reuters that if chip shipping “does not resume soon,” auto production “will be affected in the United States and other countries.” Some companies in the group recognize that their plants could notice the impact starting next month.
Japan takes positions before the coup. Japan is also bracing for impact. The Automobile Manufacturers Association (JAMA) explained that its members have received notifications from Nexperia warning of supply interruptions. According to the organization, the affected chips are part of the control systems of numerous models and their shortage could have consequences for global production. Mitsubishi Electric, which has had agreements with Nexperia since 2023, assured that it is already studying substitutes.
A geopolitical board that is already sneaking onto the assembly line. The Nexperia case is no longer understood only as an industrial problem. The intervention of the Dutch Government and the confrontation with its Chinese subsidiary have turned the company into the new point of friction between Europe, Beijing and Washington. The Netherlands justified its decision by the need to protect the strategic supply of semiconductors, while China defended that its subsidiary acts in accordance with local legislation. At the center of the dispute, Nexperia is trying to maintain its activity under two increasingly opposing regulatory frameworks.
The factories are on guard. The next few weeks will be decisive in measuring the real scope of the conflict. Manufacturers adjust their inventories and review alternative suppliers, while sector associations maintain diplomatic pressure to unblock the situation. From Sweden, Volvo Cars CEO Håkan Samuelsson explained to the Financial Times thatalthough his company, owned by the Chinese group Geely, does not face immediate problems, “there will be some factories that will have to stop.” He believes that the key is to react quickly and apply the lessons learned from the semiconductor crisis during the pandemic.
Images | Nexperia | Caesar Salazar
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