The car company Volkswagen will interrupt production of the Golf at its headquarters in Wolfsburg next Wednesday. At the same time, production at the Zwickau plant, where various electric cars are built, is also to be stopped. This is reported by the Bild newspaper and refers to people familiar with the matter. In Zwickau, the news was announced during a staff meeting on Wednesday. VW initially did not want to confirm this officially. That morning, Volkswagen had prepared the workforce for production stops – but under the heading “Production is currently not affected”. Several thousand employees in Wolfsburg are involved in assembling the Golf; the Zwickau plant has over 9,000 employees. According to F.A.Z. information, discussions are ongoing between Volkswagen and the employment agency about short-time work. The conflict surrounding the chip manufacturer Nexperia threatens to affect the entire industry, as semiconductors have become a scarce commodity almost overnight. “The chips will last for a few more days,” was heard from the Volkswagen Group on Tuesday. In plain language, that meant: the production stop was being prepared. Models from the entire group are affected, including Porsche and Audi. According to reports, interim solutions are being worked feverishly, so the planning could still change at short notice. Discussions between Volkswagen and the employment agency about short-time work will definitely begin in November. As with VW, crisis teams throughout the entire auto industry are playing through the extreme situation that the shortage could continue – because the situation cannot be solved economically. Nexperia produces 100 billion chips annually. Tens of thousands of employees could be confronted with the chip shortage at their workplace in the near future. “This is a global impact, it’s really severe. These chips are like bird seed, what I mean to say is that they are in almost all components,” is how an industry expert describes the problem. “You can of course re-design these chips, but that takes months – and stocks don’t last that long. If nothing changes, the supply chain will be empty in the foreseeable future – and then production will stop.” The background to the crisis is the fact that the chip supplier Nexperia is at the center of a geopolitical dispute. Because Nexperia, with an annual production of 100 billion chips, dominates around half of the global market for standard chips, the entire industry is ultimately drawn into the conflict. Based on the automotive industry, the world market share is 40 percent. For this reason alone, replacements are not so easy to obtain. Many Nexperia customers are now quickly using all possible sources to replenish their stocks, which is why prices have already risen sharply. The Federal Ministry of Economics called those affected together for a crisis summit on Wednesday: car manufacturers and their suppliers, but also large companies in mechanical engineering, factory equipment suppliers and specialists in automation technology. A spokesman for the Ministry of Economic Affairs said that they were in close contact with the various parties involved, including the Chinese government, and were looking for solutions. Hildegard Müller, President of the VDA car manufacturer association, reported on Tuesday that they were in contact with the federal government and the EU Commission: “The current focus should be on finding quick and pragmatic solutions.” No cutting-edge technology. The problem is worth billions. The chip shortage in the years 2021 to 2023, which was related to the Corona-related logistics difficulties, reduced German economic output (GDP) by more than 100 billion euros during this time, which was 2.4 percent of GDP in 2022. Some companies had filled their warehouses months ago and created a buffer of up to a year, according to the digital association ZVEI. After all, sanctions in the chip business between the USA and China were a harbinger of the current situation. Other companies basically lived hand to mouth with the Nexperia chips – perhaps also trusting that half of the Nexperia chips come from the Hamburg factory. However, this only helps to a limited extent in the current crisis because most of the further processing takes place in China. Lessons learned from the pandemic This is not about the latest cutting-edge technology, but rather about electronic components, some of which have been on the market for decades. They are quick and easy to recreate and often have a unit price of just a few cents, explains Clemens Otte, ZVEI microelectronics division manager, and warns: “This is a wake-up call to position ourselves more broadly and more resiliently.” This development already began during the Corona crisis, but it must now be pushed forward more quickly and decisively – across all areas. Lower Saxony’s Prime Minister Olaf Lies, who is directly involved in the issue as a member of the VW supervisory board, also demanded that Europe’s own capacities for the production of key components such as semiconductors, battery cells and green materials must be built up and strategically secured. At ZVEI, they are already turning their attention to the next possible crisis: they also have production in many areas such as printed circuit boards abandoned in this country. Today, at best, two to three percent of these parts are manufactured in this country. The rest comes mainly from Asia.More on the topicHowever, the previous chip crisis was not entirely without a learning effect. The Mercedes employees, for example, have learned how to “hole-mount”: Mercedes continues to produce and puts the cars in the yard without heated seats, without electric windows and without the automatic trunk lid, because the Nexperia chips are missing for these parts in order to complete them when the semiconductors are available again. It is an expensive emergency solution that Mercedes could now fall back on. Mercedes says they are still covered “in the short term.” This variant is an advantage for the suppliers, because if production stops completely (as planned in the case of VW), their problem expands: then the car manufacturers no longer buy any parts due to a lack of demand, even those that have nothing to do with electronics. A short-term switch to other chip suppliers is not so easy in the car industry for regulatory reasons, reports Jörg Buchheim, CEO of Car roof manufacturer Webasto: The approval of a new chip manufacturer takes a good twelve months. Companies that have a higher added value of their own are doing somewhat better. “We do not purchase individualized, but only standardized chips from Nexperia,” explains Trumpf Technology boss Berthold Schmidt. The software design for the chips plays a trump card on the semiconductors, which is why it is possible to switch to other providers for the hardware.
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