Automotive Industry Reacts to Semiconductor Supply Threat
European carmakers are reportedly deploying strategies similar to those used during the COVID-19 pandemic as they prepare for potential semiconductor shortages. This development comes after China moved to restrict outbound shipments from Nexperia, a crucial chipmaker for the automotive industry that operates under Chinese ownership.
Supply Chain Vulnerability Exposed
According to reports, the European Automobile Manufacturers’ Association (ACEA) has warned that stocks of Nexperia chips could be depleted within weeks. “It’s going to be a war between carmakers,” one source at a European manufacturer stated, highlighting the potential severity of the situation. Industry officials indicate that while some components manufactured by Nexperia have readily available alternatives, others may require several months to source from different suppliers.
Another person at a European automotive supplier described the response: “We’ve gone into 2021 mode,” referencing the previous semiconductor crisis that severely impacted global vehicle production. The analogy of a water tap was used to illustrate the uncertainty: “If you turn off a tap, the pipe will empty but you don’t know at what speed. Will the tap be reopened before the water runs out? That’s why we need to quickly solve this problem.”
Industry-Wide Response Measures
Analysts suggest that automotive companies have reactivated their pandemic-era “chips war rooms” to address the emerging supply challenge. Multiple automotive suppliers reportedly now conduct daily coordination calls between logistics teams to identify the most critical supply gaps. This comes amid broader industry developments in supply chain security.
Andrew Bergbaum, global co-leader of the automotive and industrial practice at AlixPartners, stated that “the disruption has the ability to be really quite substantial.” Meanwhile, UBS analyst Patrick Hummel warned that any escalation in the dispute “would affect the entire industry, as it could lead to widespread production halts at original equipment manufacturer and supplier level.”
Manufacturer-Specific Contingency Plans
Major automotive manufacturers are implementing individual response strategies. Volkswagen has established a dedicated task force, though the company maintains that current production remains “unaffected.” Both Stellantis and BMW confirmed they are working closely with suppliers to evaluate potential supply risks. Bosch, which utilizes Nexperia components, stated it maintains communication with the chipmaker alongside other suppliers and customers, noting they “continuously monitor market developments and adapt to changing situations.”
German chipmaker Infineon is reportedly receiving inquiries from clients regarding its capacity to supply components typically sourced from Nexperia. This situation emerges alongside other related innovations in semiconductor technology.
Geopolitical Context and Corporate Structure
The current situation stems from diplomatic tensions between the Netherlands and China. The Dutch government recently assumed management control of Nexperia after Washington indicated the company would remain on export control lists if Chinese leadership continued. The Dutch economics ministry cited “serious governance shortcomings” when removing Zhang Xuezheng, who serves as both CEO and largest shareholder.
Nexperia, which manufactures essential but low-margin chips widely used in automotive electronics, was sold to a Chinese consortium in 2017 before being acquired by Wingtech. Although the company produces semiconductor wafers in Germany and the United Kingdom, approximately 80% of its final processing occurs in China, where chips are sent for packaging and testing.
Diplomatic Maneuvering and Export Controls
Sources indicate that Wingtech executives suggested Beijing restricted Nexperia’s exports to gain diplomatic leverage. Wingtech chair Yang Mu told investors that “under the current export controls, the vast majority of our products will remain within China.”
China’s commerce ministry spokesperson He Yongqian attributed the standoff to pressure from Washington, specifically referencing expanded U.S. sanctions affecting subsidiaries of blacklisted companies. “It is hoped that the Dutch side will act independently and autonomously,” He stated. A Dutch government spokesman confirmed ongoing engagement with Chinese authorities “to reach a constructive solution in the interest of Nexperia’s continuity.”
The automotive industry is calling for governmental intervention to resolve the situation quickly. ACEA Director-General Sigrid de Vries emphasized that “we really need quick and pragmatic solutions from all countries involved.” This supply chain challenge coincides with other recent technology sector disruptions and market trends affecting industrial components. The situation reflects broader industry developments in global supply chain management.
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