There are few scarier words to hear in the automotive industry than “chip shortage.” All modern cars require sophisticated software and computer chips to operate. The most recent chip shortage in the early 2020s following the pandemic hit supply chains hard and bottlenecked automotive production for more than a year.
That bottleneck sparked huge price increases for new cars and used cars, as buyers who would have been in the new car market increased demand for used cars. According to the US Bureau of Labor Statistics data, the price of a new car rose 21.2% between 2020 and 2023. A Ford F-150 that cost $50,000 in 2020 was about $60,602 in 2023.
Automakers associations warn that a Netherlands-based chip manufacturer caught up in a trade dispute between the U.S. and China could cause another shortage that impacts global automobile manufacturing.
Nexperia is based in the Netherlands, but it’s owned by a Chinese company. In case you’ve been living on Mars the last six months, ties between the US and China are strained right now. The company’s current political predicament could spark substantial problems with global automotive supply chains. The US Commerce Department placed its Chinese parent company, Wingtech Technologies, under trade restrictions in December 2024.
On September 30, the Dutch government took control of Nexperia citing “serious governance shortcomings.” This came after reported pressure from the United States, though the Netherlands denied US involvement. Then on October 4, the Chinese Ministry of Commerce instituted export controls on Nexperia China and its subsidiaries, preventing them from exporting products manufactured in China. On October 15, the Dutch-controlled Nexperia removed CEO Zhang Xuezheng and installed a replacement. Negotiations between the Chinese and Dutch governments are ongoing.
Reporting is unclear on the scale of the issue and which auto manufacturers would be affected. But Nexperia does operate on a large, global scale. According to the company’s website, Nexperia produces more than 6,000 automotive-related products and ships more than 110 billion products annually.
The ACEA, European Automobile Manufacturers Association, issued warnings that automakers only had weeks’ worth of chip supply from Nexperia, and that replacing its production through other sources could take months. The ACEA’s director general described the situation as “alarming.”
The Alliance for Automotive Innovation, a US lobbying firm, believes that the situation will disrupt auto production in the US and other countries if left unresolved.
“If the shipment of automotive chips doesn’t resume – quickly – it’s going to disrupt auto production in the US and many other countries and have a spillover effect in other industries. It’s that significant. We’re urging a quick resolution, so US and global automaking remains on track.”
– John Bozzella, CEO of the Alliance for Automotive Innovation, per CNN.
It’s worth noting that another potential shortage, while certainly capable of affecting the automotive sector, likely wouldn’t be as severe as the previous one. Spanning multiple years early in the decade, that shortage was caused by multiple chip manufacturers that suffered COVID-related production slowdowns, resulting in widespread shortages that affected everything from automobiles to common consumer electronics.
Sources: Nexperia, Reuters, Automotive News, CNN, The New York Times
We want to hear from you! Share your opinions in the thread below and remember to keep it respectful.
Your comment has not been saved
This thread is open for discussion.
Be the first to post your thoughts.

source