Honda briefly shut downs factories as Nexperia chip feud isn't over yet

Even basic car chips are caught in a growing international tech dispute

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In brief: The international feud surrounding semiconductor manufacturer Nexperia has threatened automotive supply chains for months. Although negotiations between China and the West have begun to cool tensions, Honda's recent troubles indicate that Nexperia isn't out of the woods yet.

Bloomberg reports that Honda will temporarily halt production at factories in Japan and China in late December and early January due to critical component shortages. The issue likely stems from the ongoing fallout between the Dutch and Chinese governments over logic chip supplier Nexperia.

All three of Honda's China-based factories, part of a joint venture called Guangqi Honda Automobile Co., will shut down from December 29 to January 2. Meanwhile, Japanese factories will close on January 5 and 6, before partially restoring operations until January 9. Although the company did not specify which Japanese facilities would pause production, Digitimes (via Tom's Hardware) suspects that the Suzuka and Saitama plants will be impacted.

Multiple automakers have become anxious since the feud broke out in October surrounding Nexperia, a company that supplies critical semiconductors. Although Nexperia does not manufacture cutting-edge chips like TSMC, Samsung, or Intel, the auto industry relies on its semiconductors for electronic functions such as windows and windshield wipers.

Nexperia operates in the Netherlands, Germany, and the United Kingdom, but is a subsidiary of Wingtech Technology, a Shanghai-based firm partially owned by the Chinese government. Earlier this year, the US government placed Wingtech on its semiconductor entity list and threatened new sanctions unless the company changed its leadership.

The trouble started in October when the Dutch government, viewing Nexperia's management as a threat to its domestic supply chain, invoked a Cold War-era law to seize control of the company. In response, Beijing temporarily halted Nexperia's Chinese exports, which it needs to supply chips to clients.

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Following the Dutch government's decision, Honda temporarily reduced production in the US and Mexico, while Volkswagen, Stellantis, Ford, General Motors, Volvo, Mercedes-Benz, and other automakers said that the feud could threaten their supply chains. Multiple manufacturers came within days of factory stoppages.

Although the Dutch government, Beijing, and Honda eventually reversed their actions, Wingtech later accused Nexperia of secretly reorienting its supply chain away from China. The upcoming production pauses in Japan and China indicate that the situation is still developing. Honda's stock price fell by around 1% following Thursday's news.