European Landa Chip Crisis Storm, Volkswagen: A Week We Are Safe After That I Know

JAKARTA - The supply crisis of chips that hit Europe is confirmed to hit the automotive industry, especially Germany. Now, it is reported that production at Volkswagen's main plant (VW) in Wolfsburg, Germany, is safe for the next week. This assurance comes amid concerns over the supply crisis of the Nexperia chip triggered by a diplomatic dispute between China and the Netherlands that threatens Europe's automotive supply network.

However, quoted from Reuters, Friday, October 24, the uncertainty began to overshadow the period after next week which was also shortened due to the German national holiday.

While there are currently no plans to launch a state-backed working hours reduction scheme, the automaker has reportedly held deterrence talks with German labor agents for this option in the future. VW itself declined to comment on the situation.

Background Dispute

Tensions in the European auto industry have been fueled by export restrictions announced by Beijing. These restrictions are a response after the Dutch government took control of Nexperia, an important chipmaker, citing concerns over intellectual property related to its Chinese owner, Wingtech. Wingtech itself was included in the US government's list of national security risks last year.

It is feared that China's restrictions on the Nexperia product will severely hit the supply network of major European auto companies, including VW, BMW, and Mercedes, which have voiced alarms about potential production cessation if the dispute is not resolved immediately.

The chips produced by Nexperia are not sophisticated components, but are urgently needed in high volume in the automotive industry and consumer electronics. Most of the Nexperia chips are produced in Europe but are packaged in China and it is not yet clear how long the existing stock will last.

To avoid a repeat of production cessation that occurred during the semiconductor crisis during the COVID-19 pandemic, VW and Mercedes-Benz stated that they were looking for alternative supplies. Industry sources call Infineon, NXP, and Texas Instruments a replacement option, although the approval process takes time.

Pekan sebelumnya, VW sempat menginformasikan kepada para pekerjanya bahwa penghentian produksi sudah tidak bisa dikepikankan. Sementara itu, Porsche, anak perusahaan mewah VW, memastikan produksi mereka berlanjut secara normal.