Chip crisis hits automotive giant: Production of 2 popular models will be halted!

Automotive giant Volkswagen is reeling from a new chip crisis. Production of the brand's most popular models, the Golf and Tiguan, could be halted as soon as next week due to a supply chain bottleneck stemming from geopolitical tensions. The crisis is feared to affect tens of thousands of jobs and deal a significant financial blow to the company.

At the heart of the crisis is a dispute involving Dutch chipmaker Nexperia, which is affiliated with Chinese tech group Wingtech. Beijing is alleged to have imposed export bans on some critical components in response to the Dutch government's takeover of Nexperia at the end of September, under pressure from the US.

This poses a threat not just to Volkswagen but to the entire automotive industry, as these special semiconductors are integrated into critical vehicle components such as electronic control units through suppliers, rather than directly to manufacturers.

According to industry sources, while Volkswagen's current chip inventory is sufficient to meet this week's production, stocks could run out starting next week, at which point a partial production shutdown is unavoidable. The Golf, produced at the main factory in Wolfsburg, is expected to be the first model affected, followed by the Tiguan.

It will affect tens of thousands of employees

The most concerning consequence of this situation is its impact on employment. According to company sources, Volkswagen is preparing for short-time work (kurzarbeit). Group representatives have reportedly already contacted the employment agency to request support in the event of a potential production shutdown. The crisis, initially expected to affect a few thousand employees, could impact tens of thousands more if it continues.

The crisis comes at a time when Volkswagen is already going through a difficult period, grappling with declining sales in China and the US, as well as massive investment costs for new technologies.

While Volkswagen has diversified its supply chains, learning from the bottlenecks experienced in the wake of the coronavirus pandemic, industry sources emphasize that some of the specialized chips produced by Nexperia have no alternative supplier. This increases the risk of the crisis spreading beyond Volkswagen and into the entire European auto industry if the dispute isn't resolved quickly.