EU Preps Auto Chip Exemption

European carmakers are staring down a critical chip crunch as the EU weighs a temporary exemption for a Chinese semiconductor supplier caught up in Russia-related sanctions. Without quick action, automakers warn they could be forced to shut down production lines within weeks—power semiconductors, not cutting-edge chips, are the lifeblood here, and global inventories could run dry by October. Even chips made in Europe often rely on backend work in China, underscoring just how vulnerable supply chains are when geopolitics shift.

But here’s the catch: it’s not just power chips. A new warning from the Alliance for Automotive Innovation says carmakers now face a memory chip squeeze, too, as DRAM capacity shifts to feed the AI boom powering data centers for tech giants like Google and Amazon. With memory makers chasing higher profits in AI, auto-grade memory is getting harder to find, driving up costs and threatening production. Price hikes are already showing up in places like Hyundai’s India lineup—and if you think automakers can pivot to new chips quickly, think again. Qualification cycles take months, and the costs ripple down to dealers and buyers.

Featuring insights from Bloomberg, Tom’s Hardware, Handelsblatt, Automotive News, Nikkei Asia, and Reuters.

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