A new semiconductor crisis is emerging in the automotive industry due to a geopolitical dispute between the U.S. and China, specifically affecting the Dutch company Nexperia. This dispute has disrupted the supply of essential but non-cutting-edge chips, threatening automotive production that is still recovering from the earlier COVID-19-related shortage. The situation is critical because some automakers have warned that existing chip supplies could run out within weeks.
Causes of the new crisis
Geopolitical tensions: A major catalyst is a dispute between the U.S. and China that has ensnared Dutch-based Nexperia, a crucial supplier of chips used in essential functions like steering and switches.
Dutch government actions: The Dutch government took control of Nexperia, citing a need to protect crucial technology on European soil.
Chinese restrictions: In response to the Dutch government's actions, China has imposed restrictions on the export of some semiconductor components.
Supply chain vulnerability: This has created a supply chain crisis, particularly in Europe and the U.S., as these chips are not readily available from local or regional suppliers.
Impact on the automotive industry.
Production halts: Automakers are concerned about halting or slowing production, with some warning that they could run out of parts in a matter of weeks.
Vulnerable to disruption: The automotive industry is particularly vulnerable because it relies on these "mature node" chips, which are in high demand and have a supply chain susceptible to disruption.
Increased pressure: Price pressures from chipmakers may further complicate the situation, potentially diverting supply to other industries with higher profit margins.
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