Automaker group warns Nexperia chip supply issue could quickly disrupt US production

WASHINGTON: 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.

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Nexperia warned automakers it cant guarantee chip deliveries, risking major production delays in the US and Europe.
Dutch and US export controls on Chinese-owned Nexperia have triggered supply chain issues and diplomatic strain.
Automakers fear immediate effects on vehicle production; industry groups urge swift action to avoid broader economic fallout.

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, Toyota, Ford, Volkswagen, 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.

The Dutch government announced on Sunday 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.

Washington put Wingtech, which has 100% ownership of Nexperia, on the U.S. list in late December.

The Chinese commerce ministry issued on October 4 an export control notice prohibiting Nexperia China and its subcontractors from exporting specific finished components and sub-assemblies manufactured in China, according to a statement Nexperia published on Tuesday.

Volkswagen and BMW both said production in Europe had not yet been impacted by the issues but that they were working to identify potential supply risks.