Nexperia fallout threatens automobile production as Japanese carmakers warn of supply disruptions while European companies prep assembly line shut-downs — mature-node chip market in crisis as supply dwindles

Japan's Automobile Manufacturers Association has issued a statement claiming that Nexperia has informed its Japanese clients that it may be unable to maintain a steady chip supply, reports Bloomberg. Meanwhile, Volkswagen could halt production of two car models in Germany next week due to Nexperia chip supply, according to Bild. If the supply of Nexperia chips is not resumed shortly, then the ripple effect on the industry will cause automakers to halt output before they get the necessary components, or they qualify new ones.

Japan's Automobile Manufacturers Association, which represents automakers such as Honda, Mazda, Nissan, and Toyota, confirmed on Thursday that domestic auto part suppliers had received notifications from Nexperia warning it was unable to maintain a steady supply of chips amid the ongoing conflict between the Dutch government and the company's Chinese owners. The companies are currently preparing measures to limit possible disruption, according to a statement published by The Guardian. The organization stressed that the chips in question are essential for electronic control systems crucial for cars, which means that shortages of such components could disrupt the assembly of new components and therefore cars across the industry.

"The chips manufactured by the affected manufacturers are important parts used in electronic control units, etc., and we recognize that this incident will have a serious impact on the global production of our member companies," the statement by JAMA reads. "We hope that the countries involved will come to a prompt and practical solution."

Japanese automakers are not the only companies unable to get chips from Nexperia's China-based fabs after the Dutch government seized control of the company earlier this month. Volkswagen is reportedly prepping to halt production of the Golf as early as next Wednesday and Tiguan afterwards. While Volkswagen's production is unaffected for now, its management also warns that supply disruptions are possible in the short term, according to France24, which confirms Bild's report. Volkswagen Group owns 10 car brands assembled in Europe, so it is likely that the supply disruptions will affect brands like Audi, Porsche, Seat, and Skoda.

Nexperia does not produce components for cars, but it supplies a variety of simplistic chips (e.g., SiC or GaN MOSFETs) to automakers as well as Tier 1 makers of actual components, such as Bosch, Continental, Kostal, Magna, Mitsubishi Electric, and many others. While Nexperia's chips are fabbed in the Netherlands, the lion's share of these semiconductors is then tested and assembled in China. Due to the ongoing conflict, Wingtech Technology, the owner of Nexperia, has ceased supplies of already produced chips to partners outside of China, which affects many companies from Europe and Japan.

Japanese and European companies are trying to contain the impact by adopting chips from different suppliers. Mitsubishi Electric, which cooperates with Nexperia on power semiconductor development, said its dependence is minimal and it is ready to switch to other suppliers if necessary. However, the problem with such third-party ICs is that they must be automotive grade, and components on their base must be qualified by actual automakers, which takes time and costs plenty of money.

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