Honda, VW bracing for outage

Global automakers are once again preparing for production cuts due to potential shortages of automotive semiconductor chips; this time triggered by the Dutch government amid geopolitical tensions between the US and China.

honda engine This week it became the first known automaker to cut production due to problems with chips from Dutch supplier Nexperia, which is owned by a Chinese company Wingtech Technology Inc..

The industry was hopeful that a meeting between President Donald Trump and Chinese leader Xi Jinping in Asia this week would provide some relief, but no resolution to the chip issue has been announced.

Volkswagen said in a statement on Thursday: at least until next week Before supplies hit production, other major automakers said they were monitoring the situation around the clock and trying to mitigate disruptions.

“The chip situation at Nexperia, there’s a cross-functional ‘war room’ in the building I live in, and it looks like this: [a] “real job” Stellantis CEO Antonio Filosa told investors during a quarterly call on Thursday. “And every day we press on actions and projects to extend our deadline. There is daily management of what is a global industry-wide issue.”

Such “war rooms” have become commonplace in the automotive industry amid supply chain disruptions that have become more common since 2020 when the Covid pandemic disrupted the production and delivery of many parts, including chips.

Several people in the automotive industry confirmed to CNBC that war rooms have been set up in their companies as they explore alternative purchasing methods. It involved buying from the open market as well as working with major suppliers to find alternative sources.

“Suppliers across the motor vehicle industry are working to understand potential impacts on production and supply continuity,” MEMA, the largest U.S. vehicle supplier association, said in an emailed statement. he said. “Chips and diodes form the basis of automotive components and systems, from infotainment systems to door handles to steering and braking. The absence of even a single diode or chip can disrupt the production of vehicles.”

The situation with Nexperia began late last month, when the Dutch government took control of the company, in what was seen as a highly unusual move after the United States raised security concerns.

In making the decision, The Dutch government cited fears It was stated that the company’s technology, which specializes in high-volume chip production used in automotive, consumer electronics and other industries, “cannot be used in an emergency situation”.

China responded by blocking exports of the firm’s finished products. spark alarm in Europe’s automotive industry.

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 like Nexperia, even though much of the production has been moved to China.

The Association of European Automobile Manufacturers said this week that automakers are close to shutting down production lines because of a chip shortage that comes four years after a shortage of such parts during the coronavirus pandemic.

ACEA Director General Sigrid de Vries said: “This means that there are only a few days left until the assembly line is stopped. We call on all concerned to redouble their efforts to find a diplomatic way out of this critical situation.” he said. in a statement.

According to S&P Global Mobility, the affected chips are older semiconductors used in essential vehicle functions such as windshield wipers and window controls and do not have sufficient alternative sources.

A Nexperia spokesperson mentioned a previous statement Summarizing the ongoing situation, the company said it had sought exemption from export restrictions and was working to mitigate the effects of the decision.

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

“Only by returning full control and ownership rights to the company’s beneficial shareholders and management and stopping political interference in corporate governance can the Dutch government begin to repair the damage to its reputation, reduce international tensions and protect its own and Europe’s economic security,” the spokesman said in an emailed statement. he said.

The effects of Honda’s production cuts extend to all major North American factories, including major vehicle assembly and support facilities in the United States, Canada and Mexico.

“We are currently managing an industry-wide semiconductor supply chain issue, carefully managing existing parts supply and making strategic adjustments to production as needed to meet our customers’ needs,” Honda said in an emailed statement on Thursday, calling it a “fluid” situation.

If a solution is not found, the effects are expected to continue to spread to other automakers.

Ford Motor CEO Jim Farley said last week that the chip issue was at the forefront of conversations during his visit to Washington, D.C., earlier this month. He called it a “political problem,” saying the company was working with the U.S. and Chinese governments to resolve the issue.