The turmoil of another global microchip and semiconductor shortage has arisen again, and it has the potential to cause serious delays in new car deliveries. That could mean Irish buyers queuing for their new-registration-plate car in January might have to queue a little longer.
So far, when it comes to chips supplied by Sino-Dutch company Nexperia, the car industry is casting anxious glances over its shoulder, but not quite pushing the red button marked “panic” just yet.
Nexperia, which is based in Nijmegen in the Netherlands, can trace its roots back to the Mullard Radio Valve Company, which was bought out by Dutch electronics giant Phillips in the 1920s.
Now, it’s owned by Wingtech, a gigantic Chinese tech company. Or at least it was, until the Dutch government stepped in some weeks ago and put Nexperia into public ownership, citing concerns about the influence – political influence in particular – that Wingtech was exerting, as well as issues with tariffs on Chinese-produced goods.
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The US government had warned its Dutch counterparts that particular concerns were being raised about the company’s Chinese chief executive, Zhang Xuezheng, and that exports to the US might be blocked if he remained in place, citing national security issues.
On top of this, concerns have been raised globally about China’s sometimes heavy-handed attitude when it comes to negotiating the supply of raw materials.
However, the Dutch government had made a critical miscalculation – Nexperia designed and made the chips, but they were all sent to China for finishing. The Chinese end of the operation acted as you might expect – throttling the supply and export of finished chips. And thus a bottleneck was created.
The last time a global bottleneck in the supply of critical microchips was caused by many factors, not least the outfall of the Covid-19 pandemic, but also fires that coincidentally put two major chip factories in Japan out of business.
Those fires triggered a massive global shortage, which saw tech companies such as Apple, Dell, Microsoft and others scoop up the supply that was there, leaving car makers – who had foolishly not been stockpiling – out in the cold. Production was subsequently affected, and in some cases (Volvo and Ford especially) car companies began to produce limited-run versions of their cars, minus some optional features, in an effort to keep factories running and sales ticking over.
[ Volvo and VW warn Nexperia battle risks triggering factory shutdownsOpens in new window ]
Will the Nexperia effect cause the same problems? It’s certainly possible. Several major car makers and, more importantly, the suppliers of components to those car makers, are reliant on Nexperia. Car executives are worried and are monitoring supply daily, but so far deliveries for January are running according to plan.
Toyota, the biggest-selling brand in Ireland, told The Irish Times that “We are okay for January” and that “stock levels are good”.
Volkswagen hasn’t made any official comment on specifically Irish sales, but has said it has now started to receive a supply of chips from Nexperia, so it’s possible that the crisis may have already passed for the VW Group.
BMW, one of the brands most closely associated with the Nexperia shortage, was a little more circumspect, saying in an official statement: “The BMW Group was informed about the latest developments at the Dutch chip manufacturer Nexperia. We are in close contact with our suppliers and are continuously assessing the situation in order to identify potential supply risks at an early stage.
“We explicitly welcome the positive signals from the political arena on this topic. We are taking a variety of measures to prevent potential adverse effects. However, we cannot discuss details of these measures at this point in time.”
Those signals from the political arena include the appointment of a new president at Wingtech, Sophie Shen Xinjia, who will doubtless be keen to resolve the issues at hand, not least because Wingtech’s stock was temporarily suspended from trading on the Chinese stock exchange as a result of the turmoil.
Motor industry analyst Matthias Schmidt told The Irish Times this current chip shortage is very different from the last one.
“As this is a political situation rather than a physical shortage, we expect discussions between the Netherlands, Brussels and Beijing to come to some agreement.”
If you’re concerned that a car you’ve ordered might be delayed, it’s probably a good idea to start talking to your dealer now, rather than later, and try to find out where in the production process your car is at, and whether any delays are likely.
