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The semiconductor shortage caused by the ownership of chip maker Nexperia in the Netherlands is not just a governance issue, but a warning to the auto industry.
This is the view of Sepna Amlani, Modi’s supply chain manager, who believes that automakers need to build more diverse and robust supply chains to avoid similar disruptions.
The crisis at Nexperia began when the Dutch government temporarily took control of the Chinese company due to security concerns. China responded by halting semiconductor exports to the company until an agreement was reached in November.
However, supply chain risk for automakers remains an active threat to auto production, Amlani told WardsAuto in an email.
“For procurement leaders, this is more than just a temporary disruption,” he said. “This represents a structural risk: geopolitical decisions can immediately change the economics of sourcing. Even as China eases restrictions, governance violations and quality concerns persist. Future risks could come from tighter EU controls or retaliatory measures from Beijing.”
Here’s what Amalani shared in a follow-up email about how automakers can avoid further supply and production disruptions.
Q. What can automakers do to avoid geopolitical disruptions that affect production?
Even after the Nexperia settlement, operational frictions persist, as the company cannot immediately resume wafer exports due to internal disputes between its EU and Chinese units, Amlani said, “underscoring that corporate conflicts can disrupt supply chains as much as geopolitical events.”
Amlani further pointed out: the commercial issues caused by the car and car parts tariffs of the United States and the change of the company’s obligations to increase the production capacity in the United States should be taken into consideration.
“Supply leaders must plan for multiple scenarios, with and without broad waivers,” he said.
Amlani suggested two steps automakers can take to address current and future geopolitical disruptions, including diversifying into key sources of auto components, such as semiconductors, while “considering governance and transparency of ownership as key risk factors.”
His second suggestion is to take steps to use real-time visibility to look at Tier 1 contract suppliers to secure better relationships with so-called N-tier suppliers.
Q. What does a multi-sourcing strategy look like and how does it affect quality control?
To ensure stronger supply chains, many companies are now considering multi-sourcing as a key strategy to build flexibility, Amlani said.
This includes having two or three sources across geographies, thereby spreading risk among suppliers in Southeast Asia, Europe, and North America.
It also means that manufacturers must standardize the specifications of major components by following a “manufacturing sector approval process” including design documentation, engineering change documents, material certificates, dimensional results, process flow charts and control plans.
Amlani said the process entails producing “golden samples” to ensure quality assurance, supplier accountability and risk mitigation.
He said automakers should also use tracking and analytics tools such as the Internet of Things, blockchain and quality assurance deviation detection to detect any minor changes in parts production to “verify compliance between suppliers at all times.”
“The chip shortage in 2021, which led to a significant drop in revenue in the automotive industry, underscores the importance of multisourcing,” Amlani said.
question
“Stress testing has evolved from a procurement project to a core capability embedded in the operational rhythm of resilient organizations,” said Amlani.
The model for automakers to follow involves a schedule of regular inspections, including annual testing for the entire supply chain and quarterly tests targeting critical components such as semiconductors and electric vehicle batteries.
Amlani said the tests should assess how quickly operations can be restarted and how long production can continue without key inputs. Scenarios explored should include export freezes, wafer shipment freezes, tariff escalation, and governance or internal disputes.
He added that the return on investment is clear and proven. “The cost of chip shortages in 2021 alone is far greater than the cost of maintaining a consistent stress testing program,” Amlani said. “In fact, in many cases, the investment is recouped in just one disruption avoided.”
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