Chip relaxation from China: Millions of jobs saved in the auto industry!

Chip relaxation from China: Millions of jobs saved in the auto industry!

In the last few weeks, the situation in the chip market has eased noticeably. China is signaling concession in the chip dispute with Europe and is planning exceptions to the export ban for certain Nexperia semiconductors. This development comes just in time to avert an impending chip crisis in the European auto industry. The Federal Ministry of Economics assesses the latest announcements from Beijing as “positive initial signals of relaxation” that could secure millions of jobs for the time being. Merkur reports that several companies in the automotive industry had already prepared short-time work.

Nexperia, a major global supplier of semiconductors based in the Netherlands, is particularly important to the automotive industry. The company belongs to the Chinese group Wingtech and primarily supplies electronic control devices in vehicles. Around 40 percent of the global supply of standard chips for automotive production comes from Nexperia factories. A dramatic export ban on Nexperia chips came into force at the end of September after the Dutch government placed the company under control to prevent misuse of sensitive technologies. Tagesschau writes that China criticizes the Netherlands for the delivery problems this has caused.

Background of the conflict

The conflict began at the end of September when the Dutch government took control of Nexperia due to corporate governance deficiencies. This led to an immediate export ban on October 4th, with China halting all exports of Nexperia goods from its factories. These drastic measures posed a serious threat to European car manufacturers such as BMW, Volkswagen and Stellantis. One of the first reactions was to set up a crisis team at Stellantis to better manage the situation. Industriemagazin explains that the parent company Wingtech may be placed on the US embargo list in 2024, which could have additional economic consequences for Nexperia.

However, there is a silver lining on the horizon: following talks between representatives of China and the EU in Brussels, the possibility of open export exemptions for Nexperia is being examined. The EU spokesman described these talks as a “welcome opportunity” to update export controls. However, uncertainty remains about the exact criteria for these exceptions, as well as fears about a long-term solution to the chip crisis. The German authorities and car manufacturers are cautiously optimistic about the future, although a final assessment of the situation is not yet possible.

outlook

The developments surrounding Nexperia and the chip market show once again how closely global supply chains are linked. Car manufacturers and mechanical engineering companies in Europe are initially breathing a sigh of relief, but concerns about the stability of these supply chains remain. How quickly the situation will develop now depends on the negotiations and the reactions of both sides. A comprehensive way out of the chip crisis is not yet in sight, but the current signals give cause for hope.