Key Points
- Brazil’s auto industry is facing a potential shutdown in the next two to three weeks.
- The crisis is being caused by a global shortage of chips from the company Nexperia.
- The shortage was triggered by a standoff between the Netherlands and China over the company.
- The Dutch government seized control of Nexperia, and China retaliated by blocking its exports.
Brazil’s auto industry could be forced to halt operations within the next two to three weeks if the global chip supply crisis is not resolved, a government official warned on Tuesday. The Brazilian government is now scrambling to find a solution, reaching out to Chinese authorities to try to avert a shutdown.
The crisis was triggered by a standoff between the Netherlands and China over the chipmaker Nexperia. In September, the Dutch government seized control of the Chinese-owned company, fearing its technology was being illegally transferred to China. In retaliation, Beijing blocked Nexperia from exporting its products.
This has created a massive problem for the global auto industry. While Nexperia’s chips are made in Europe, about 70% are sent to China for packaging before being shipped to customers. Now that those exports are blocked, the supply chain is breaking down.
The situation is now so dire that a senior official in Brazil’s industry ministry, Uallace Moreira, is warning of a potential shutdown for some of the country’s automakers. “If there is no solution in this short period of time, in two or three weeks, there may be a shutdown,” he said.
Brazil’s vice president has already contacted the Chinese ambassador to Brazil and the Brazilian ambassador to China to seek a diplomatic solution to the crisis.
