China lifts semiconductor export restrictions to Brazil, easing risk of auto production halt

After roughly 20 days, Brazilian auto parts companies have begun receiving an exceptional authorization from the Chinese government to resume importing semiconductors. As a result, the supply of semiconductors for car production in Brazil began to normalize last Friday (7), reducing the risk of production stoppages at Brazilian automakers.

The report found that the risk is small, although it is not yet completely eliminated.

The Xi Jinping administration established two types of exceptions for Brazilian companies: auto parts manufacturers with factories in both China and Brazil were given priority and can bypass the import embargo. Those without factories in the Asian country have begun to obtain special licenses from the Chinese Ministry of Commerce. CBN anticipated this direct negotiation channel with the Chinese government on November 1.

With these two measures, the auto parts companies that import the most semiconductors into Brazil are already beginning to anticipate a normalization of supply.

The Ministry of Development, Industry and Trade (MDIC) informed the report that semiconductor supply to Brazil is being normalized and that the Ministry is monitoring the situation together with the affected companies.

In a statement, Igor Calvet, president of the National Association of Motor Vehicle Manufacturers (Anfavea), said that the situation has improved but is not yet normalized. He assesses that the automotive industry will not be affected if there is no further interruption in imports.

At the end of October, Anfavea warned that the escalation of the trade dispute between the United States and China could lead to production stoppages in Brazil. That is because China halted all semiconductor exports after the Dutch government took control of a subsidiary of the Chinese company Nexperia. The company is responsible for producing about 40% of the world’s semiconductors. Currently, a new car contains between 1,000 and 3,000 semiconductors in its production process.

After the companies sounded the alarm, the MDIC met with the Chinese ambassador to Brazil and the Brazilian ambassador in China. These talks made it possible to create direct channels with the Xi Jinping administration to exclude Brazil from the Chinese embargo.

Source: CBN

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