More chips please! Semiconductor shortage to hit car makers again as VW admits problem

Remember the semiconductor chip shortage that plagued the automotive world just a few years ago? Well, it’s threatening to happen all over again. Leading microchip manufacturer Nexperia, which is based in the Netherlands, has raised concerns about the availability of semiconductor products it needs for its computer chips. This has the potential to halt car production and restrict the availability of new cars for consumers. 

The Volkswagen Group is one of the car companies that relies on chips from Nexperia. In a statement, the VW Group said “vehicle production at the Wolfsburg, Emden, Zwickau, Osnabrück and Dresden sites is secured for the coming week”. However, VW added that it’s “in close contact with stakeholders in light of the current situation”, and that “short-term effects on production cannot be ruled out”. 

Among the other firms that source chips from Nexperia either directly or indirectly are Nissan, Volvo, Honda, Mercedes and BMW. In light of the potential issues facing the automotive industry with chip shortages, a Nissan spokesperson said the company is “assessing the situation and will take appropriate measures as needed”.

Nexperia was partly-owned by the Chinese government and has manufacturing operations in China but due to “serious managerial shortcomings” the Dutch government took control of the company last month. The fallout from the move saw the Dutch courts replace Nexperia’s CEO Zhang Xuezheng with a non-Chinese executive, and this caused the Chinese government to respond by banning the export of Nexperia’s products. 

This dispute around Nexperia’s ownership has raised concerns about the “availability of semiconductor products critical to the European industry”, according to the firm.

As cars become more software-oriented, chip shortages become increasingly problematic. For example, the original Volkswagen Golf had around 30 semiconductors while the current Golf has around 8,000, and the all-electric ID.7 has roughly 10,000 more.

Volkswagen Group and Rivian Technologies recently announced a partnership that will result in a ‘secure supply’ of ‘high-tech semiconductors’ – though this will be for cars produced in the future rather than any current models. In a statement, the VW Group said it is “currently examining alternative sourcing options in order to minimise possible effects on its supply chain.”

The previous semiconductor shortage, which started during the Covid pandemic, was exacerbated by geopolitical factors and affected most electronic goods – from PlayStations to washing machines. Chip shortages caused several car firms to halt production – factories such as MINI’s Oxford plant, Renault’s Flins factory in France and even General Motors’ facilities in North America all paused their production lines.

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