Honda, VW bracing for outage

Global automakers are once again bracing for production disruptions due to a potential shortage of semiconductor chips for cars, this time sparked by the Dutch government amid geopolitical tensions between the United States and Europe. China.

Honda Motor This week it became the first well-known automaker to cut production due to the issue involving chips from a Dutch supplier Nexperiaowned by a Chinese company Wing Tech Technology Company.

The industry had hoped for a meeting this week between the president Donald Trump Chinese leader Xi Jinping in Asia would provide some relief, however There is no resolution The chip issue was announced.

Volkswagen reportedly said on Thursday that it had done so Until next week at least Before its supplies affected production, while other major automakers said they were monitoring the situation around the clock, in an attempt to mitigate disruptions.

“In the case of chips from Nexperia, we have a multi-functional ‘war room’ in the building I’m sitting in which has this as follows: [a] “Basic function” Stellantis CEO Antonio Velosa told investors During a quarterly call Thursday. “And every day we drive actions and projects to extend our lifespan. There is day-to-day management of what is a global industry-wide issue.”

Such “war rooms” have become a regular practice in the auto industry amid supply chain disruptions, which have become more common since the Covid pandemic destabilized the production and delivery of many parts, including chips, starting in 2020.

Several auto industry insiders confirmed to CNBC that war rooms have been set up at their companies, as they look for alternative purchasing methods. This included working with key suppliers in an attempt to find alternative sources as well as purchasing on the open market.

“Suppliers across the automotive industry are working to understand potential impacts on production and supply continuity,” MEMA, the largest association of automotive suppliers in the United States, said in an emailed statement. “Chips and diodes are essential to automotive components and systems, from infotainment systems to door handles, to steering and brakes. Even the absence of a single diode or chip can disrupt vehicle manufacturing.”

In decision making, Dutch government quote Fears This technology from the company – which specializes in mass production of chips used in cars, consumer electronics and other industries – “will not be available in emergency situations.”

China responded by banning exports of the company’s finished products. Raising alarm In the automobile industry in Europe.

German automakers are particularly sensitive to Nexperia-related disruptions because they rely heavily on large domestic suppliers, known as “Tier 1s,” and local production facilities and companies, such as Nexperia, despite a significant portion of their manufacturing moving to China.

The European Automobile Manufacturers Association said this week that automakers were on the verge of shutting production lines due to the chip shortage, which comes after four years of shortages of these parts amid the coronavirus pandemic.

“This means that the stoppage of assembly lines could be just days away,” said Sigrid de Vries, Director General of ACEA. “We urge all concerned to redouble their efforts to find a diplomatic way out of this critical situation.” In a statement.

The affected chips are older semiconductors used in basic vehicle functions like windshield wipers and window controls — parts that lack sufficient replacement sources, according to S&P Global Mobility.

A Nexperia spokesperson noted Previous statement From the company, which summarized the ongoing situation and said that it is seeking an exemption from export restrictions and working to mitigate the effects of the decision.

A Wingtech spokesperson on Thursday condemned the Dutch government’s actions, saying the company “will vigorously defend its rights and use all legal means to do so.”

“Only by restoring full control and ownership rights to the legitimate shareholders of the company and its management, and stopping political interference in corporate governance, can the Dutch government begin to repair the damage to its reputation, ease international tension, and protect its economic and European security,” the spokesperson said in an emailed statement.

ford motor CEO Jim Farley said last week that the chip issue was at the forefront of conversations when he made a trip to Washington, D.C., earlier this month. He described it as a “political issue,” saying that the company is working with the US and Chinese administrations to resolve it.

“It’s an industry-wide problem. A quick breakthrough is really necessary to avoid fourth-quarter production losses for the entire industry,” Farley said, adding that automakers have become “really good” at maximizing purchases of components such as chips after the crisis in 2021.

GM CEO Mary Barra made similar comments last week, calling it an “industry problem” that we hope will be resolved soon.

“While this may impact production, we have teams working around the clock with our supply chain partners to minimize potential disruptions. The situation is very fluid and we will provide updates throughout the quarter as appropriate,” she said during the company’s quarterly earnings call.

Other car company managers from Volvo, Mercedes Benz More also shared similar thoughts with investors and the media.

“This is a political situation, which means that the answer to this, or the solution to this, lies in the political space, primarily between the United States and China, and in this case, with Europe caught in the middle,” Mercedes-Benz CEO Ola Kallenius said Wednesday during an earnings call.