Dubai Telegraph - Car giant VW warns of production hit from Nexperia chips row

Dutch officials invoked a Cold War-era law last month to effectively take control of the Netherlands-based but Chinese-owned Nexperia, citing national security concerns, as the sector increasingly becomes a focus of geopolitical tensions.

The company then said Beijing had banned it from exporting certain goods from China since early October -- potentially a serious problem for carmakers as its chips are widely used in vehicles' electronic control units.

Volkswagen, Europe's biggest carmaker, confirmed some Nexperia components are used it its vehicles but said production was "currently unaffected".

"However given the dynamic nature of the situation, an impact on production cannot be ruled out in the short term," added the company, whose 10 brands range from Audi to Seat and Skoda, without giving further details.

It said production of the VW Golf and Tiguan would be suspended on Friday as part of planned measures and would resume the following week, though it denied earlier media reports this was linked to the chip shortage.

But Germany's Bild newspaper reported that the chip shortage would lead to the suspension of production at key VW plants from next week.

Talks were due to take place later Wednesday between auto industry leaders and the German economy ministry on the fallout from the chip shortages, industry sources confirmed to AFP.

Hildegard Mueller, president of Germany's VDA auto industry association, had warned Tuesday that the fallout "could lead to significant production restrictions in the near future, and possibly even to production stoppages."

"The current focus should be on finding quick and pragmatic solutions," she said.

VW's share price tumbled over two percent in Frankfurt on Wednesday after reports emerged of the potential stoppages at its plants.

Stefan Bratzel, an auto industry expert at the Center of Automotive Management in Germany, told AFP that carmakers were making "attempts to switch to other suppliers".

"But it is not easy to find other suppliers at short notice," he said.

I.Menon--DT