European auto industry struggling with shortage of common chips

Illustration photo.

Warnings of possible production halts have been issued by the European auto industry, as tensions between China and the Netherlands over chipmaker Nexperia are disrupting the supply chains of many carmakers.

At the center of the controversy is Nexperia, a key chip supplier to the automotive industry, though little known to consumers. The Dutch government recently took control of Nexperia, citing intellectual property security concerns related to its Chinese parent company, Wingtech, which the US has designated as a national security risk.

In response, China banned Nexperia's Chinese branch and its subcontractors from exporting "certain finished components and subassemblies," severely affecting the chip supply chain for European automakers.

"All chips currently produced at Nexperia China are delivered to tier-1 suppliers in the automotive industry. These chips are not high-tech chips, but just common chips and are supplied to almost all European car manufacturers. Therefore, any company that buys chips from Nexperia will be affected," said Beatrix Keim, Director of Business Development and China Projects, Center for Automotive Research (CAR).

For now, production will continue, but with conventional chips like Nexperia’s, automakers typically only stockpile enough components to last a month or two. Some companies are trying to find alternative sources, but it’s not easy.

"It is very difficult to switch to another source of supply, because the approval process when changing components is very complicated, which can last for weeks or even months. In addition, they also need to adjust production capacity, prepare input materials and accept new prices when supply becomes scarce. Even though these are cheap components, when demand suddenly increases, suppliers can impose higher prices. Car manufacturers will have to race against time and price to win the right to be supplied first," said Ms. Beatrix Keim - Director of Business Development and China Projects, Center for Automotive Research (CAR).

According to research firm TechInsights, Nexperia has a 40% market share in the semiconductor and diode segment of automotive chips—a proportion large enough to have a significant impact on the entire industry. So the risk of disruption could spread beyond Europe, at a time when automakers are already vulnerable to tariffs and the tightening of rare earth supplies.

Source: https://vtv.vn/nganh-o-to-chau-au-lao-dao-vi-thieu-chip-thong-thuong-100251024163338696.htm