Experts Share: What’s Influencing The Chip Shortage?

European carmakers face new production trouble after Dutch chipmaker Nexperia stopped shipping wafers from China. The halt follows a management dispute and export controls imposed by Beijing.

Bloomberg reports that the Dutch government took temporary control of Nexperia in September over security concerns. The government said it could block any company decision that might harm national or European economic security…

The European Automobile Manufacturers’ Association said the shortage of basic chips used in vehicle electrical systems is worsening daily. Director General Sigrid de Vries said members already face stopped part supplies, and that assembly line shutdowns could happen within days. Many carmakers, such as BMW, Stellantis and Volkswagen, use Nexperia’s chips. ACEA confirmed that reserves are running out and that new suppliers will take months to meet demand.

How Did The Situation Reach This Point?

Nexperia’s Chinese arm and its local management have clashed over payment terms, according to a letter from interim chief executive Stefan Tilger.

The company suspended deliveries from last week. China’s export restrictions on Nexperia products deepened the shortage, adding pressure to European factories. The Dutch government said talks with Chinese authorities are underway to restore chip supply and stabilise production across Europe.

How Is TSMC Performing?

On the other hand, TSMC’s Q3 results showed real growth driven by demand for AI chips. The company reported a 39% rise in profits, beating forecasts from analysts who had expected a 28% increase. Earnings per share reached £2.23, higher than the predicted £2.03.

AvaTrade’s chief market analyst Kate Leaman said the company’s revenue hit about £25 billion, its highest ever, proving that demand for high-performance chips continues to grow. She added that TSMC’s success shows how AI technology is reshaping global chip production, as the company scales up investment in 2-nanometre and advanced packaging.

While Europe faces shortages of basic automotive chips, TSMC’s results have very different fortunes across the global semiconductor market, where demand for advanced AI chips is really high even as carmakers struggle for simpler components.

Experts Share More On The Shortage

Our Experts:

• Mike Kappes, Co-founder and CSO, NEXT Semiconductor Technologies
• John Boyd, Principal, The Boyd Co.
• Dr. Simon Thomas, CEO and Co-Founder, Paragraf
• Andy Thompson, Partner, EIP
• Jim Bureau, CEO, Loftware

Mike Kappes, Co-founder and CSO, NEXT Semiconductor Technologies

“There are many suppliers and types of chips, but assuming this is about AI processors from Nvidia, the manufacturing is totally dependent on the production capacity of TSMC. Nvidia does not make its own products and instead outsources manufacturing to TSMC, which is the only company in the world that can make the latest processors from Nvidia. The gap between TSMC and the only other viable option, Samsung, is probably insurmountable, since as soon as Samsung catches up with where TSMC is today, the manufacturing process at TSMC will have evolved to offer better cost, better performance, or both.

“TSMC is dependent on suppliers of manufacturing equipment, specifically one company in the world that makes the advanced manufacturing equipment needed for the most powerful chips that Nvidia has designed. This company, ASML, is based in the Netherlands and is further dependent on a sole-source supplier of optical lenses from Carl Zeiss.”

John Boyd, Principal, The Boyd Co.

“My firm has been very active helping major CHIP manufacturers locate facilities around the globe and in the US – we are also a trusted source of data and analysis on the CHIP industry, trade policy and workforce trends.

“There two major causes of the global semiconductor chip shortage is the enormous demand from the auto, consumer electronics, healthcare , appliances industries, robotics and AI, etc. that rely on CHIPs. The second, is the supply chain disruptions caused from the pandemic and more recently the geo-political tensions – that have also put an exclamation point on the dangers, risk and costs of over-reliance on Asian manufacturing and sourcing (where China has had a decades long advantage in investing in rare earth minerals).

“As companies look to reshore to the US and adapt to new trade policies and market forces – states like AZ, TX and NY that have invested in site readiness and workforce training in areas like engineering, robotics and AI – and states that can meet the large utility and water demands of the CHIP industry – will continue to be the major winners in landing these billion dollar economic development CHIP mfg projects.”

Dr. Simon Thomas, CEO and Co-Founder, Paragraf

“While the contributing factors to the current and previous chip shortages have been well documented, one recurring issue is the lack of investment in maintaining non-sovereign, legacy technologies. Proactive consequence scanning and sustained investment in sovereign semiconductor technologies, especially new, emerging ones, are essential, not only to stimulate development, but also to ensure long-term resilience and growth.”

Andy Thompson, Partner, EIP

“The current chip shortages stem from the ongoing trade dispute between the US and China. Nexperia is a Dutch semiconductor company that supplies chips that are used by various automotive companies such as VW and ZF. Nexperia was bought by the Chinese-state backed Wingtech in 2019. In Dec 2024, Wingtech was put on the US BIS Entity List, meaning it was under certain US export restrictions. On 29 September, the US tightened restrictions further, meaning any companies that are majority owned by listed companies fall under the same restrictions, pulling Nexeria under these export controls.

“The Dutch government then invoked national security concerns to take control of Nexperia, ousting the Chinese CEO in the process. The Chinese government responded by preventing export of Nexperia chips from China back to Europe. This move looked to create chip shortages in the automotive sector that are reminiscent of the shortages that occurred during Covid. However, in the last few days ongoing negotiations have resulted in China indicating it may lift the restrictions for certain entities. This one is yet to play out, but yet again we see semiconductors as pawns in global trade tensions.”

Jim Bureau, CEO, Loftware

“The chip shortage is largely being driven by supply-demand imbalances, sudden spikes in demand in certain segments – particularly electric vehicles – and limited visibility across complex supply chains.

“Without clear traceability from supplier to assembly, auto manufacturers will struggle to anticipate bottlenecks and respond quickly. Companies that implement cloud-enabled collaboration tools that provide end-to-end visibility are better positioned to manage these disruptions and reduce the impact of such shortages in the future.”