Ford Rival VW Sounds Alarm Over Potential Chip Shortage

As Ford Authority reported earlier this week, China-owned chip maker Nexperia sent a note to suppliers and automakers recently informing them that it can no longer guarantee its ability to deliver chips - which is a huge problem given the fact that this company’s chips are critical to U.S.-based automotive production. This potentially looming chip shortage - which comes not too long after a similar problem impacted automotive production during the pandemic - has drawn the attention of several companies, including Volkswagen.

According to Reuters, Volkswagen has informed its workers that it can't rule out production stoppages due to this looming chip shortage, via a recent letter, which stated that the automaker hasn't been impacted just yet. “In view of the dynamic situation, however, we cannot rule out an impact on production in the short term,” a VW spokesperson said. However, another, separate report indicated that VW production pauses are already planned for late October, though a spokesperson declined to comment on what they called "speculation."

This problem stems from a decision by the Dutch government to take control of the China-owned chipmaker late last month, amid concerns that it may transfer sensitive technology to its parent company, Wingtech. Nexperia was at risk of being impacted by U.S. rules that place restrictions on companies that are at least 50 percent owned by entities on a restricted list - and in this case, that outfit is 100 percent owned by the China-based Wingtech.

In response, the Chinese commerce ministry issued an export control notice that prohibits Nexperia and its subcontractors from exporting specific components. As a result, the Alliance for Automotive Innovation - a lobby group that represents Ford and most major automakers - also sounded the proverbial alarm regarding potential issues.

“If the shipment of automotive chips doesn’t resume - quickly - it’s going to disrupt auto production in the U.S. and many other countries and have a spillover effect in other industries,” said the group’s CEO John Bozzella. “It’s that significant.”