In the ongoing economic tensions between the United States and China, Nexperia, a Dutch semiconductor company, has emerged as a pivotal player. Nexperia specializes in manufacturing chips essential for the automotive industry. Recent trade disputes may significantly impact global auto production and drive up vehicle prices.
US-China Trade Tensions Affecting Auto Industry
The trade issue began last December when the US Commerce Department placed Wingtech Technologies, Nexperia’s parent company based in China, on a list facing trade restrictions. In October, China’s Ministry of Commerce prohibited Nexperia China from exporting certain components manufactured in the country. Subsequently, the Dutch government took control of the company in response to these developments.
Crisis in Chip Supply Chain
Nexperia’s chips are crucial for building modern vehicles. If production ceases, the repercussions could mirror the earlier semiconductor shortage caused by the pandemic, which led to temporary plant closures and a significant drop in the availability of new cars.
Automakers are more dependent on chips than ever. These components help manage various functions in vehicles, including:
- Adjusting driver’s seats
- Fuel injection control
- Braking systems
Without these essential items, car assembly would be severely hindered. Nexperia claims to have over 6,000 products suitable for automotive applications, with an annual shipment of roughly 110 billion units. The company employs approximately 12,500 people globally, including in Europe, Asia, and the United States.
Industry Concerns and Responses
Automaker trade groups have voiced concerns over potential shutdowns. John Bozzella, CEO of the Alliance for Automotive Innovation, emphasized the urgency of addressing the chip supply issue. He warned of significant disruptions if shipments do not resume quickly. The current situation poses risks not only to the auto industry but also to related sectors.
The European Automobile Manufacturers Association indicated that replacing supplies from Nexperia could take months, while existing stocks may only last weeks. Sigrid de Vries, the association’s director general, called for immediate and effective solutions from all parties involved.
Impact on Vehicle Prices
Nexperia accounts for approximately 40% of the automotive chip market related to transistors and diodes. Automakers are already facing escalating costs due to tariffs enacted during previous political administrations. Kelley Blue Book recently reported that the average price for a new car in the US has surpassed $50,000 for the first time—a clear indicator of how trade tensions and supply chain issues are influencing the auto market.
