Latest US crackdown on Chinese chips hits semiconductor tool makers
The United States has launched a further crackdown on China’s semiconductor industry, for the third time in three years.
- A dispute involving a Chinese-owned semiconductor maker could disrupt the global supply of semiconductors to automakers.
- Major automakers such as GM and Stellantis are monitoring the situation, which could affect U.S. auto production as early as next month.
- Auto industry groups are calling for an early resolution to avoid major economic disruption like the 2021 chip shortage.
Detroit automakers are facing an impending semiconductor chip crisis that could put a brake on much of new car production.
A group representing major automakers has warned that a dispute between China and the Dutch government is disrupting the supply of semiconductor chips used in various car parts.
According to Reuters, the European Union’s automotive association ACEA said automakers and their suppliers recently received notice from Nexperia that it could no longer guarantee chip deliveries.
The group warned that the result could be significant disruption to car manufacturing. According to Reuters, some automaker officials told Reuters that U.S. auto production could be affected as early as next month. The officials requested anonymity due to the sensitivity of the matter.
The warning comes after the Dutch government announced it had placed Chinese-owned computer chip maker Nexperia under control as of September 30 over concerns about possible technology transfers to Nexperia’s Chinese parent company Wingtech. Most of Nexperia’s chips are manufactured in Europe, but the packaging is done in China, according to Reuters. Neither side of the company’s operations will be able to quickly find a replacement partner. It’s unclear how long customers’ stockpiles will last.
Automatic groups facilitate quick resolution
Reuters reported, citing court documents, that the Dutch government’s move came after months of increased pressure from the United States on Nexperia. The company was at risk of being affected by new U.S. rules extending export control restrictions to companies that are at least 50% owned by one or more companies on the U.S. Entity List. In December, the US government placed Wingtech, which owns 100% of Nexperia, on the list of US entities.
The auto industry is on high alert following the incident, with General Motors and Stellantis saying they are closely monitoring the situation. Ford Motor Co. declined to comment.
But the Alliance for Automotive Innovation, which represents major automakers including GM, Toyota, Ford, Volkswagen and Hyundai, called for an early resolution, citing the potential for significant economic disruption.
“We don’t know all the circumstances surrounding this incident. What we do know (from very recent experience) is that disruptions to the interconnected automotive supply chain will rapidly reverberate not just within the United States but around the world,” John Bozella, CEO of the Alliance for Automotive Innovation, said in a statement to the Detroit Free Press, part of the USA TODAY Network. “If auto chip shipments do not resume soon, auto production will be disrupted in the U.S. and many other countries, with other industries affected as well. that Important. We’re looking for a quick resolution to keep auto manufacturing in the U.S. and around the world on track. ”
GM works 24 hours a day
So far, GM’s production has not been affected by the spike in chip shortages, but CEO Mary Barra told investors on GM’s third-quarter earnings call that GM is scrambling to source chips elsewhere to help alleviate production disruptions.
“This is an industry issue. This may impact production, but we are teaming with our supply chain partners around the clock to minimize the potential for disruption. The situation is very fluid,” Barra said.
He said GM’s team has “swung into action” to assess where the potential disruptions lie and what sources of supply are available for the chips.
“The team is working around the clock to achieve that,” Barra said. “We are very hopeful that this matter will be resolved. In the meantime, we will continue to run as the team continues to work as we speak to ensure we continue to identify other sources of information.”
“Stellantis is closely monitoring the situation and working with Nexperia and other suppliers to assess potential impacts and develop mitigation measures,” Stellantis spokeswoman Kaylene Connelly told the Detroit Free Press in an email.
“We do not comment on supplier issues,” Ford spokesman Mike Levine told the Detroit Free Press.
But the news comes just as Ford is facing an ongoing aluminum shortage due to a fire at New York supplier Novelis. Ford uses aluminum in the bodies of many of its vehicles, including its best-selling F-Series pickups. As reported by USA TODAY Network, sources say Ford has temporarily suspended production of the all-electric Ford F-150 Lightning and two large SUVs due to an aluminum shortage.
Ford declined to comment on adjustments to vehicle production.
Regarding the chip situation, Levine directed the Free Press to MEMA, an association representing auto suppliers.
Automotive supplier organizations call on President Trump
MEMA spokeswoman Megan Gardner said in a statement that the group is “closely monitoring recent export controls affecting semiconductors and diodes, including developments related to Nexperia. Suppliers across the auto industry are working to understand the potential impact on production and supply continuity.”
MEMA said chips and diodes are the basis of automotive components and systems. Used in infotainment systems, door handles, steering, and brakes. The absence of a single diode or chip can cause disruption in vehicle manufacturing.
Automotive suppliers source thousands of parts around the world and have made significant progress in diversifying their supply chains since the 2021 semiconductor shortage, MEMA said in a statement.
“However, risks still exist,” the statement said. “This issue has implications far beyond tier one suppliers, impacting sub-suppliers across the global supply base who provide components for nearly every vehicle system.”
MEMA said it was working with suppliers, automakers, consumer electronics partners and other industry groups to assess the full scope of the impact, and would seek support from President Donald Trump if needed.
“Together, we aim to ensure the administration understands the potential impact on the competitiveness of U.S. manufacturing and supply chains and support constructive solutions that protect both national and economic security,” MEMA said in a statement.
The last chip crisis
A tiny chip, roughly the size of a quarter, can certainly cause big problems.
Four years ago, a shortage of semiconductor chips brought U.S. auto production to a near standstill. Car dealerships had barren parking lots, consumers had limited options for new car purchases, and many buyers had to wait months for their new vehicle.
The chips are tiny transistors made of silicon, which is found in most minerals on the earth’s surface. These allow computers, smartphones, home appliances, and other electrical devices to function. Most vehicles cannot run without it.
The 2021 chip shortage was a result of the COVID-19 pandemic, which increased demand for personal electronic devices such as cell phones and laptops in which chips are used, to the point where production could no longer keep up with demand.
Detroit Free Press staff writers Jackie Charniga and Liam Rapley contributed to this report.
Jamie L. Lareau is a senior auto writer covering Ford Motor Company for the Detroit Free Press. Contact Jamie at jlareau@freepress.com. Follow her on Twitter @Jalalean. To sign up for our automotive newsletter. become a subscriber.
