Jaguar Land Rover Faces Fresh Crisis as Chinese Chip Ban Threatens UK Production

Jaguar Land Rover (JLR), Britain’s largest carmaker, is bracing for significant disruption in December following a ban by Chinese authorities on exports of automotive computer chips. This move is set to worsen the already fragile state of JLR, which is still reeling from the fallout of a major cyberattack earlier this year. Tier two suppliers, including German engineering giant Bosch, Hong Kong-based Johnson Electric, and South Korean firm Hanon Systems, have notified their tier one partners of impending halts in deliveries, citing a critical shortfall of chips produced by Chinese-owned Nexperia.

Nexperia, headquartered in the Netherlands but owned by China’s Wingtech Technology, stands as one of the world’s leading semiconductor companies, producing approximately 100 billion chips annually and commanding nearly 10 per cent of the global market. Most of these components are integral to modern automotive electronic systems. The Dutch government’s recent intervention to seize local control of Nexperia from its Chinese parent—citing national security—prompted a swift and retaliatory response from Beijing. As a result, China’s Ministry of Commerce imposed a freeze on Nexperia chip exports, effectively kneecapping a vital artery in the automotive supply chain.

While the majority of Nexperia’s chips are manufactured in Europe, about 70 per cent are packaged in China before distribution. Delays and restrictions at this crucial stage have sent ripples across the automotive sector. Industry sources note the emergence of a grey market, where traders are now hoarding remaining supplies, eyeing inflated prices as shortages bite further into December. JLR has expressed to its suppliers that its car production is now at risk, with insiders warning of “a significant stoppage” even if a total halt is avoided.

Efforts to manage the crisis have seen companies like Bosch seeking alternative sources, optimising inventories, and exploring technical substitutions. However, building up new chip supply capacity is no quick fix. The European Automobile Manufacturers’ Association cautions that securing alternative suppliers could take months, a timescale at odds with the industry’s acute and immediate needs.

These developments come at a turbulent time for JLR, following a year defined by crisis. The company temporarily suspended US deliveries due to tariffs and suffered a debilitating cyberattack that is estimated to have cost the UK economy upwards of £2 billion. Recent efforts at factory recovery have been undermined by the fresh chip supply woes. Meanwhile, a £1.5 billion government rescue loan remains untouched, with very limited uptake of JLR’s £500 million finance scheme for suppliers.

With the carmaker’s chief executive Adrian Mardell passing the baton to PB Balaji, chief financial officer at parent company Tata Motors, the ongoing supply chain challenges threaten to compound leadership transition pressures. Wider repercussions are being felt across the European sector, with major manufacturers like Mercedes and Nissan also searching globally for alternative chip sources. The risk of production stoppages looms large, raising critical questions about future resilience and supply chain security for the automotive industry in the UK and beyond.