The trade deal between the U.S. and China could give automakers some relief from the looming threat of a major chip shortage stemming from the fight over Nexperia.
The details: Following last week’s meeting between President Trump and President Xi Jinping of China, key parties tied to the export conflict surrounding the Netherlands-based (but Chinese-owned) chipmaker have begun discussions to resolve the matter, reports CNBC.
The Trump administration reportedly plans to announce in the coming days that Nexperia will begin to resume shipments of the chips, which are used for key facets of a vehicle’s operation.
While the White House did not initially respond to the report, the Chinese Commerce Ministry appears to have confirmed that exemptions for Nexperia chip exports are being considered.
What they’re saying: "As a responsible major country, China fully considers the security and stability of domestic and international production and supply chains," the ministry said, adding companies facing difficulty obtaining parts should contact Chinese authorities, per Reuters. "We will comprehensively consider the actual situation of the enterprise and exempt eligible exports."
Why it matters: A restart of Nexperia exports lowers the tail-risk of another sudden chip choke point—avoiding destabilization of automakers’ build schedules, vehicle deliveries to dealerships, and inventory levels.
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Between the lines: Last week, more automakers started sounding the alarm about the threat that the chip shortage could impact their operations—catching the attention of the White House.
Honda suspended production at a Mexican plant on Tuesday, and the automaker started to adjust production in the U.S. and Canada.
On Friday, Reuters reported that Nexperia had suspended supplies of wafers—a critical component of the chips—to its Chinese assembly plant.
Bottom line: The possibility of Nexperia resuming exports from China doesn’t necessarily solve the larger structural concerns around China’s dominance in the chip sector—but it keeps a potential production disruptor from becoming the next big bottleneck in the industry.
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