Automakers may halt output in Brazil if chips crisis persists, says government official

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BRASILIA (Reuters) -Some automakers may halt operations in Brazil within two to three weeks if the global chips supply crisis continues, an official said on Tuesday, adding the Brazilian government is contacting Chinese authorities to find a solution.

Uallace Moreira, a secretary in Brazil’s Development, Industry, Trade and Services Ministry, did not specify which automakers in Latin America’s largest economy could be hit first by the global crisis, triggered by a stand-off between China and the Netherlands over chipmaker Nexperia.

“If there is no solution in this short period of time, in two or three weeks, there may be a shutdown for some automakers,” Moreira told journalists after a meeting with the president of Brazilian automakers association Anfavea.

Brazil’s Vice President Geraldo Alckmin, who also heads the ministry, attended the meeting as well.

In September, the Dutch government took control of Nexperia, which manufactures chips for cars and consumer electronics, as it cited worries about the possible transfer of technology to the firm’s Chinese parent company, Wingtech.

In response, the Chinese government blocked Nexperia from exporting its products from China. While most of the company’s chips are produced in Europe, around 70% are packaged in China before distribution.

Moreira noted Alckmin has already contacted both the Brazilian ambassador to China and the Chinese ambassador to Brazil to initiate discussions about the matter as the local private sector requests dialogue between the parties.

(Reporting by Victor Borges in Brasilia; Writing by Andre Romani and Fernando Cardoso; Editing by Kylie Madry and Aurora Ellis)