The automotive industry, having recovered from supply chain problems it has struggled with since the pandemic, is being shaken by a new wave. According to a report by Bloomberg, Japanese giant Honda has decided to suspend production at its factories in Japan and China due to increasing chip supply problems. Behind this decision lies a technology war that began in the Netherlands and has escalated into a global crisis.

When are the factories closing?

According to the plan, Honda will halt operations in Japan on January 5th and 6th. The company has not yet detailed which factories will be affected. However, the biggest cutback is happening in China. The manufacturer’s Chinese subsidiary, Guangqi Honda Automobile, will shut down three of its factories between December 29th and January 2nd.

At the root of this production halt lies a geopolitical crisis that erupted in the Netherlands. In October, the Dutch government, bowing to intense pressure from the Trump administration, seized control of the Chinese-owned chip manufacturer Nexperia. The intervention against this company, which produces low-level chips critical to automobiles and home appliances, triggered a chain reaction.

The Dutch government justified the seizure by citing serious management deficiencies in the company and the possibility that its Chinese majority shareholder, Wingtech, might move critical technologies out of Europe. However, the New York Times revealed that the Netherlands had actually been aware of these plans since 2019.

Beijing did not remain silent and retaliated harshly by blocking the export of chips produced by Nexperia. Following constructive negotiations between the parties, the Netherlands suspended its intervention. China, while not completely lifting export restrictions, eased them with some exemptions. However, this forced truce was not enough for the supply chain to recover.

Honda predicted that production would return to normal by the end of November, but this did not match expectations. Industry consultant Ambrose Conroy emphasizes that no one in the industry was prepared for such geopolitical disruptions, and they still aren’t.

So, do you think Honda’s decision to halt production will spread to other brands? How will car prices be affected by this crisis? Share your thoughts with us in the comments!