Stellantis supplier seeks court order to compel chip supply for Jeep
plant
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[April 16, 2021] By
Ben Klayman and Stephen Nellis
(Reuters) - A federal judge in Michigan
will hear arguments on Friday on whether to issue an emergency order
forcing NXP Semiconductors to provide chips to a supplier of automaker
Stellantis.
The supplier, JVIS-USA, alleges that without the chips it has ordered,
there will be an "imminent shutdown" of a Detroit factory that makes
Stellantis' profit-generating Jeep Grand Cherokee. NXP responded that it
has no direct contractual relationship with JVIS-USA obligating it to
send the chips.
JVIS-USA is a supplier of an electronic assembly that helps control the
heating, cooling and ventilation systems for the Grand Cherokee, the
Dodge Challenger and Charger, and the Chrysler 300.
The JVIS allegations provide a rare window into how the global chip
shortage - which has disrupted production at Stellantis as well as Ford
Motor Co and General Motors Co - has played out for one company in the
middle of a long supply chain.
The global automotive chip crunch started late last year, when
automakers and their suppliers failed to understand they needed to put
in orders months ahead of time as the consumer electronics industry
surged and took up chipmaking capacity. Then this year, a series of
natural disasters at automotive chip plants deepened the shortage; NXP
cites weather-related issues in Texas in the dispute with JVIS.
JVIS does not buy chips directly from NXP, instead getting them through
layers of suppliers and distributors. But it alleges that NXP created an
oral contract with it during a Zoom call that NXP held with JVIS, a chip
distributor and a circuit board supplier to JVIS. NXP denies that claim,
saying the call was an industry-standard status update from a
distributor.
In a lawsuit filed March 31 in state court in Michigan that was later
moved to the U.S. District Court for the Eastern District of Michigan,
JVIS alleges that NXP later reduced the number of chips it would deliver
by tens of thousands from what JVIS had expected.
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The logo of Stellantis is seen at the main entrance of the FCA
Mirafiori plant in Turin, Italy, January 18, 2021. REUTERS/Massimo
Pinca/File Photo
JVIS alleges the shortfall will cause it to stop production by April 19, which
in turn will cause a shutdown of Stellantis production at its Jefferson North
Assembly Plant in Detroit within the first 10 days of May. JVIS is seeking an
order that would force NXP to supply the chips, which are made in Austin, Texas.
Stellantis officials did not have an immediate comment. JVIS and its attorneys
could not be reached for comment.
NXP declined to comment, but in court filings said it has "has no contract with
JVIS and no duty" to supply the chips.
"NXP simply has no such semiconductors lying around in the midst of a world-wide
shortage," the company wrote, adding that a February freeze in Texas cost it
five weeks of production time and 700,000 lost or delayed chips.
JVIS alleges it told NXP it needed 70,000 NXP chips for the Jeep plant in the
second quarter. In late February, JVIS alleges, NXP and a chip distributor said
during the Zoom call that they would supply to JVIS 42,000 chips for the Detroit
plant, but that NXP and the chip distributor reduced that to 27,000 in late
March.
NXP said it has no oral or written contract with JVIS, and even if it did, its
standard terms include a "force majeure" clause that excuses delays caused by
natural disasters.
"The process of restarting a fab after this sort of freezing weather event is
complicated and time-consuming," NXP wrote, saying that "complex residual
repairs" could continue until the end of June.
(Reporting by Ben Klayman in Detroit and Stephen Nellis in San Francisco;
Editing by Leslie Adler)
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