Automotive industry warns of production disruptions amid semiconductor crisis
Nexperia has informed its customers that it can no longer guarantee reliable semiconductor deliveries. The shortage is the result of geopolitical interventions. The Dutch government assumed control of Nexperia and dismissed CEO Zhang Xuezheng by court order, citing concerns over possible technology transfer to the Chinese parent company, Wingtech.
In response, the Chinese government imposed export restrictions on parts of Nexperia’s production. While Nexperia’s largest plant, employing 1,600 staff, is located in Hamburg, the chips are shipped to China for further processing before being re-exported to markets including Europe. Following the expropriation in the Netherlands, the Chinese government has now banned the export of many components containing Nexperia chips, affecting around 80 per cent of end products, according to Nexperia.
Quick and pragmatic solutions sought
The semiconductor crisis at Nexperia is hitting the automotive sector hard. Nexperia is a key global supplier of chips widely used in electronic control units for vehicle electronics. “The situation could lead to considerable production restrictions in the near future, and possibly even to production stoppages if the interruption in the supply of Nexperia chips cannot be rectified in the short term,” VDA President Hildegard Mueller said in a statement. The German industry association is engaging with affected companies, industry stakeholders, the German government and the European Commission to “find quick and pragmatic solutions,” she added.
Electric vehicles are particularly dependent on semiconductors, containing more than twice as many chips as combustion-engine cars. In 2022, consultancy P3 Group reported that electric vehicles typically use 1,300 chips per vehicle versus 600 in petrol or diesel models, with around half located in the powertrain.
As a result, electric vehicle production may be more severely affected by the Nexperia crisis than conventional vehicle production. The absence of a single chip can prevent an entire control unit—or even the complete vehicle—from being assembled. Electric vehicles are disproportionately impacted due to their extensive electronics, including battery management systems, inverters, power electronics, sensors, and driver assistance systems.
Approval of components from other suppliers takes time
Automakers and suppliers are attempting to diversify semiconductor supply chains. However, even if the same chip type is available from alternative providers, approving new suppliers and setting up production can take several months, while current Nexperia chip stocks are expected to last only a few weeks, warns the European Automobile Manufacturers’ Association (ACEA).
“This is a cross-industry issue affecting a large number of suppliers and virtually all of our members” said ACEA Director General, Sigrid de Vries. “We suddenly find ourselves in this alarming situation. We really need quick and pragmatic solutions from all countries involved”
It remains unclear which suppliers, manufacturers and models will be affected and to what extent. While there have been media reports of a production halt at VW’s Wolfsburg plant, the company has not confirmed this. A recent VDA survey indicates that many of the largest suppliers and automakers in Germany expect initial delivery problems within days.
Automakers generally do not source semiconductors directly from manufacturers but purchase complete components from suppliers such as Bosch, Continental or ZF, which in turn source smaller components from other suppliers. This layered supply chain makes it difficult to immediately assess the full scale of the crisis.
This article was first published by Florian Treiß for electrive’s German edition.
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