The Nexus chip crisis threatens to cripple the US automotive industry.
MEMA warns US automakers could shut down for 2–4 weeks due to China blocking Nexperia exports after the Dutch takeover; Ford, GM, and Stellantis prepare contingency plans, risking a repeat of 2021.
Auto assembly plants in the US risk having to temporarily shut down for the next two to four weeks due to supply disruptions related to the Nexperia dispute. The warning was issued by MEMA, the largest association of automotive parts and components suppliers in the US, after China blocked Nexperia exports from its manufacturing facilities, following the Dutch government's takeover of Nexperia.
Nexus is a key chip supplier for the automotive and consumer electronics industries. Although it primarily produces older-generation chips for basic functions, disruptions to this type of component could still break assembly lines, replicating the global chip shortage scenario that occurred in 2021.
Nigeria at the heart of trade tensions
On September 30, the Dutch government announced the takeover of Nexperia – a Dutch-based company wholly owned by Wingtech (China). Subsequently, according to MEMA, Beijing blocked Nexperia from exporting products from its factories in China. This move was seen as a reaction to the Dutch decision, further straining trade relations between China and the West.
In Europe, car manufacturers are operating 24/7 to prevent the conflict from escalating. This week, Nexperia informed its Japanese customers that on-time delivery was no longer guaranteed. At the same time, China is tightening controls on critical components, while the US is implementing similar retaliatory measures as the two sides prepare for a highly anticipated summit next week.
Older generation chips, but they are a vital link in the chain.
Unlike the more complex chips used in operating systems or driver assistance systems, Nexperia's chips utilize older technology, handling basic functions such as turning on the windshield wipers, opening the windows, and controlling simple electrical systems. However, these are indispensable components in modern vehicles, and few manufacturers still produce them, making the supply chain vulnerable to disruptions.
A single broken link can render a vehicle unfinished. Therefore, despite not being state-of-the-art, older generation chips remain a "bottleneck" that could bring global assembly lines to a standstill if the supply chain is disrupted.
The expected impact on US auto production over the next 2–4 weeks.
MEMA predicts that a shortage of Nexperia-related chips could force some US auto plants to temporarily shut down within the next 2–4 weeks if no solution is found. The risk of disruption is not limited to just a few models, as these essential chips are found in most current vehicle models.
| Mold | Developments | Expected impact |
|---|---|---|
| 30/9 | The Netherlands announces takeover of Nexperia. | Triggering trade tensions |
| Afterward | China blocks Nexperia exports from facilities in China. | Disruption in the supply of older generation chips. |
| This week | Nexperia announces that deliveries to Japanese customers may be delayed. | The risk of delays is spreading to multiple regions. |
| next 2–4 weeks | MEMA warns of risk of US auto plant shutdowns. | Assembly disruptions, delayed vehicle deliveries. |
| Next week | The highly anticipated summit | Expectations for a temporary de-escalation of tensions. |
The reaction of major car manufacturers
Ford CEO Jim Farley called the Nexperia conflict a “political” issue and said he had spoken with government officials during a trip to Washington last week. General Motors CEO Mary Barra acknowledged that supply constraints could impact production, and said GM was working with partners to mitigate risks. Stellantis – the parent company of Jeep, Peugeot, and Fiat – said it was working with Nexperia and other suppliers to assess the impact and develop a response.
Risk scenario and cooling expectations
If tensions persist, the US automotive industry could repeat the 2021 chip crisis, when many factories had to shut down production lines, causing significant losses and delays in vehicle deliveries globally. Nevertheless, stakeholders hope a temporary trade agreement between the US, China, and Europe can resolve the impasse before production lines are forced to stop.
In the short term, manufacturers in Europe are increasing shifts to mitigate the impact, while in the US, automakers are closely monitoring supply chains and preparing contingency plans for component replacements if necessary. However, due to the specific characteristics of older generation chips and the limited number of suppliers, rapid transition is a significant challenge.
Balancing supply chain security goals with the need for continued production will be the industry's priority in the coming weeks, as the market awaits signals of a de-escalation in negotiations.
