Honda to gradually restore North American plants next week as Nexperia tensions ease

Honda Motor Co. has announced plans to resume regular production at its North American plants starting next week, following a three-week disruption. The disruption began in late October due to a semiconductor supply shortage linked to Nexperia. The Japanese automaker confirmed today that it has secured enough components to start the gradual restoration of operations. 

According to Honda’s spokesperson, the company has secured a certain level of alternative semiconductor supply. It has initiated a phased return to normal operations at its plants in the U.S., Canada, and Mexico.

The production freeze began on October 28, when the auto manufacturer halted output at the Celaya auto plant in Mexico that produces the HR-V multipurpose SUV for the North American market.

Honda cautions that the planned resumption remains subject to changes

Honda has warned that the planned resumption next week may change, noting that the supply situation remains “fluid” despite alternative components having been sourced. The supply bottleneck is traced back to the escalated trade tension between the U.S. and China, as well as the Netherlands’ seizure of Nexperia, which impacted its ability to export certain chips manufactured in China. 

Nexperia, headquartered in the Netherlands and a subsidiary of China’s Wingtech Technology, supplies semiconductor materials used in electronic control units (ECUs). According to a study, ECUs govern engine performance, safety functions, and climate control systems. Notably, modern vehicles are highly dependent on chips; therefore, disruption in any part of the ECU component supply can halt the entire production line. 

The Mexico Celaya plant, which remains closed, has an annual capacity of 200,000 units. In 2024, it produced roughly 190,000 primary HR-V models intended for the North American market. The three-week shutdown threatened the supply of Honda’s most critical models, sparking concerns across Japan’s automotive industry. Nissan launched a supplier survey to determine the impact and whether it might face similar constraints, but no large-scale effect was reported. 

The Nexperia chips that were affected fell under the ones covered by Chinese export regulations. The rules tightened amid geopolitical and technological access tensions between China and the U.S. According to a Cryptopolitan report, the tensions have so far eased after Trump cut a deal with Xi Jinping on the Republic of Korea on November 2.  

According to the report, the deal de-escalated trade tensions between the two countries, whereby U.S. tariffs were lowered, large Chinese purchases of American farm goods were made, and China reversed several export control and retaliatory measures. 

Honda’s chip supply stabilizes after China lifted rare-earth mineral restrictions 

Based on a previous Cryptopolitan report, the deal paused China’s planned restrictions on rare earth minerals and magnets, which are essential in chipmaking for EV motors, renewable power equipment, and weapon manufacturing. China confirmed it will issue licenses to allow exports of gallium, germanium, antimony, and graphite to U.S. companies and suppliers. 

Honda’s spokesperson told Reuters that a prolonged halt would have risked exacerbating the vehicle shortage in the North American market, especially in the compact crossover segment, where the HR-V is positioned. The disruption also risked impacting suppliers and logistics partners tied to Honda’s North American operations. The plan to resume next week is expected to stabilize output; however, additional disruptions may arise due to unresolved issues with Nexperia’s chip production. 

The push for a diversified semiconductor chip supply has been present since 2020, in response to the global chip crunch, but ECUs pose a particular challenge. According to the Reuters report, ECUs rely on specialized parts that cannot be easily replaced, leaving manufacturers vulnerable to geopolitical risks. 

So far, Honda is expected to issue additional updates early next week as facilities begin to return to normal operations. The firm restoration plans mark the first step following supply chain disruption, highlighting the continued fragile nature of the global semiconductor market. 

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