Honda Motor said it will begin gradually resuming normal operations at its North American assembly plants on Monday, Reuters reported, signaling that production disruptions caused by a shortage of Nexperia chips may be easing. The company had halted output at its Mexico plant and adjusted production at factories in the United States and Canada amid the shortage.
A spokesperson said on Tuesday that Honda had secured a certain level of chip supply, such as by sourcing alternative components. Next week’s planned return to regular operations could change, the spokesperson added, as the situation stays fluid.
The automotive industry has been facing supply chain issues since 2020, however, the latest shortage was sparked by geopolitical tensions between the U.S. and China. Nexperia is owned by the Chinese company Wingtech Technology Co. but was taken over by the Dutch government. The Chinese commerce ministry issued an export control notice on Oct. 4, which prohibited Nexperia China and its subcontractors from exporting specific finished components and sub-assemblies manufactured in China.
READ: Stellantis unveils $13 billion US investment (
The Dutch government’s move to take over Nexperia came following rising pressure from the U.S. Nexperia was at risk of being impacted by a new U.S. rule that extends export control restrictions to companies at least 50% owned by one or more entities on the U.S. entity list.
Honda was the first known automaker to reduce supply because of this issue.
China has since lifted export controls on computer chips vital to car production, according to the country’s commerce ministry. The ministry said that it has granted exemptions to exports made by Chinese-owned Nexperia for civilian use.
China has also paused an export ban to the U.S. of some materials that are crucial in the semiconductor industry and suspended port fees for American ships. These moves mark an easing of trade tensions between the U.S. and China, after President Xi Jinping and his U.S. counterpart Donald Trump agreed in October to reduce tariffs on each other and pause other measures for a year.
Volkswagen’s China chief confirmed that Nexperia chip supply has resumed. “There have already been initial exports,” Ralf Brandstaetter, Volkswagen’s board member for China, told Handelsblatt, a German news outlet. “After the agreement with the United States, the Chinese Ministry of Commerce reacted quickly and announced that it would grant short-term special permits.”
How sustainably this system will function, he said, depends in particular on relations between the United States and China. The production in China remains unaffected, however, the overall situation is uncertain.