Carmakers fear production delays as spat over chipmaker escalates

An obscure chip supplier is threatening to set off a chain reaction that could halt global auto production lines.

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Carmakers and their suppliers received notice last week from chipmaker Nexperia that it could no longer guarantee delivery of its chips stemming from a dispute between China and the Dutch government.

The Alliance for Automotive Innovation, which represents General Motors, Toyota, Volkswagen, Hyundai and nearly all other major automakers, warned that the chip supply disruption could quickly hold up US auto production.

"If the shipment of automotive chips doesn’t resume — quickly - it’s going to disrupt auto production in the US and many other countries and have a spillover effect in other industries," said the group’s chief executive John Bozzella.

Meanwhile, automakers in Europe are holding urgent meetings to fend off potential outages that could come within a month, according to people familiar with the matter.

"If the situation is not resolved quickly at the political level, there is a risk of a standstill in large parts of global automotive production and in numerous other industrial sectors," said Mr Wolfgang Weber, who heads Germany’s electrical and digital industry association ZVEI.

Nexperia is the latest company caught in an escalating global trade spat ahead of China’s high-stakes talks with the US.