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Get ready for up for another semiconductor chip shortage.

A Major Chip Shortage Is Brewing

Please note There’s Another Chip Shortage Coming To Screw Up Vehicle Production

A group representing major automakers warned late on Thursday that a chip disruption stemming from a dispute between China and the Dutch government could quickly impact U.S. auto production.

Carmakers and their suppliers received notice from chipmaker Nexperia last week that it could no longer guarantee delivery of its chips, said ACEA, the European Union’s auto association, which also said manufacturing could be significantly disrupted.

In the United States, the Alliance for Automotive Innovation, which represents General Motors (GM), Toyota, Ford (F), Volkswagen (VOWG), Hyundai, and nearly all other major automakers, urged a quick resolution.

“If the shipment of automotive chips doesn’t resume – quickly – it’s going to disrupt auto production in the U.S. and many other countries and have a spillover effect in other industries,” said the group’s CEO John Bozzella. “It’s that significant.”

Some automakers told Reuters that U.S. auto plants could be affected as soon as next month. They declined to be named due to the sensitivity of the issue.

The chips made by Nexperia are crucial to production of U.S. parts and vehicles.

Why Did This Happen?

The Dutch government announced that it had as of September 30 taken control of Chinese-owned computer chipmaker Nexperia, citing worries about the possible transfer of technology to Nexperia’s Chinese parent company, Wingtech.

Court documents showed the Dutch government’s move came after months of rising U.S. pressure on the company. Nexperia was at risk of being impacted by a new U.S. rule that extends export control restrictions to companies at least 50% owned by one or more entities on the U.S. entity list.

In retaliation, Beijing imposed export controls on certain products made by Nexperia’s China operations, choking off supply to international customers. 

Nexperia Chip Shortage Contagion Hits Japanese Automakers

TruthAboutCars reports Nexperia Chip Shortage Contagion Hits Japanese Automakers

First Europe, now Japan. Automakers are getting ready for potential chip shortages after Dutch semiconductor manufacturer Nexperia warned that it may no longer be able to guarantee supply to its customers.

According to a report from Bloomberg, the Japanese Automobile Manufacturers Association is warning that the potential chip shortage will affect parts used in critical vehicle systems such as electronic control units. JAMA also added that any interruption could wreak havoc on its member companies, which include Toyota, Nissan, Subaru, Mazda, Mitsubishi, and Honda, among others.

“The chips manufactured by the affected manufacturers are important parts used in electronic control units, etc., and we recognize that this incident will have a serious impact on the global production of our member companies,” JAMA said in a statement. “We hope that the countries involved will come to a prompt and practical solution.”

The chips in question are not the high-end processors used in infotainment or autonomous driving systems, but rather small, widely used power and logic semiconductors that regulate electrical functions throughout modern vehicles. A shortage of these basic chips in 2021 paralyzed nearly every major automaker worldwide.

Lessons Not Learned

Politico reports Netherlands-China chip war terrifies European car industry

The geopolitical war around Dutch-based, yet Chinese-owned, chip supplier Nexperia is terrifying Europe’s carmakers that they’ll be hammered by a chip shortage that could wreak havoc with supply chains and shutter production lines.

The car industry’s supply of crucial chips from Nexperia is dwindling just weeks after the Dutch government seized control of Nexperia and both the U.S. and China imposed export controls on the company.

“We will see production stops and slowdowns in short order globally because a lot of suppliers don’t have the depth of stock of the chips,” said a senior automotive official who spoke on condition of anonymity because of the issue’s sensitivity. “The auto sector is at the heart of the storm.”

The shortage threatens a replay of 2022, when pandemic-era microchip shortages similarly brought car plants to a halt. Yet automakers have done little to shore up their supply chains against geopolitical shifts, and an EU plan to reshore some chip manufacturing is falling far short of its targets.

Following the 2022 shortage, the EU passed the Chips Act to alleviate the sector’s dangerous reliance on other regions for advanced or “mature” chips.

Fast forward three years, and seemingly not much has changed.

The Dutch government feared that Nexperia’s CEO, who founded Wingtech, was transferring the chipmaker’s technology and production assets out of the country.

Its decision came a day after the U.S. extended export controls on Wingtech to its subsidiary Nexperia.

While Nexperia’s chips are not the most advanced ones, they are critical to automakers: A traditional car contains up to 500 of the company’s chips — an electric vehicle as many as 1,000.

Volkswagen has warned its workers that potential production stoppages are imminent, German outlet Bild reported.

Second Chips Act

The Nexperia case and possible shortages have put the EU’s dangerous microchip reliance back on the political map.

The European Commission announced this week that it plans to introduce a second Chips Act in the first quarter of next year, following a scheduled review due by September 2026.

Currently, the bloc is nowhere close to reaching the goal of the first Chips Act, which was to boost the bloc’s market share in the global microchips value chain to 20 per cent by 2030 — about double its current share.

Both lawmakers and EU countries want a second Chips Act.

Neither the US nor EU learned anything from Chips Disaster I. That’s OK because nobody ever learns anything ever.

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Questions of the Day

So, when does Trump tell the Netherlands that he really didn’t mean to sanction Nexperia or its parent Wingtech? More importantly, would it matter?

It seems China just found another bit of leverage on Trump when he meets with Xi.

So why should China be in any rush to deliver these chips?

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