The alarm

The chip paradox between boom and bust: soon to be missing from European cars

While Nvidia's Korean supplier has already run out of 2026 production, Chinese blockades scare the automotive industry in Europe

by Biagio Simonetta

29 October 2025

3' min read

Translated by AI

Versione italiana

3' min read

Translated by AI

Versione italiana

The global semiconductor industry is generating a new paradox. A paradox that is moving along two trajectories: boom on the one hand, crisis on the other. That's right: while South Korea is celebrating its triumph of manufacturer SK Hynix, which has already exhausted all chip production for next year and is predicting a new 'chip super cycle' (which occurs when demand grows faster and for longer than expected, and global production capacity cannot keep up) fuelled by the demand for artificial intelligence.

On the other hand, Europe is experiencing hours of alarm at the shortage of electronic components that threatens to bring car assembly lines to a standstill. It is the other side of the same coin. A coin in which semiconductors are at the centre of geopolitics, supply chains and global economic balances. But let's go in order.

In Seoul, SK Hynix announced record profits and unprecedented investment plans. The company posted an operating profit of 11.4 trillion won (around USD 8 billion) in the third quarter, up 62 per cent year-on-year, while revenues rose to 24.4 trillion. The company, which supplies high-bandwidth memory (HBM) chips to Nvidia, has already sold its entire production for next year and aims to start distributing the new HBM4s by the end of 2025. This is confirmation of demand growing faster than supply.

the news within the news is clear: the race for data centre chips dedicated to artificial intelligence is draining the production capacity of the entire industry, forcing customers to book supplies well in advance and sign multi-year contracts.

According to SK Hynix, the production of DRAM and NAND memory will remain limited for a long time to come, due in part to the conversion of plants to more advanced technologies. "Supply growth will not keep up with demand," explained Kim Kyu-hyun, head of DRAM marketing. The group expects the HBM market to grow by more than 30 per cent per year over the next five years, driven by investments from tech giants and AI companies. Also driving confidence is a recent preliminary agreement with OpenAI to supply chips, a sign of SK Hynix's centrality in the artificial intelligence ecosystem. Buoyed by its competitive advantage in the most advanced segment, the company has seen its shares rise 200 per cent since the start of the year, far outperforming both Samsung and the benchmark KOSPI index.

But from Seoul's enthusiasm, we quickly move on to European concerns, where the situation looks diametrically opposed.

In fact, the European Automobile Manufacturers' Association (ACEA) has issued a major warning in the last few hours: semiconductor stocks are running low and car production could come to a halt 'within days'. The trigger for this emergency is China's export ban on Nexperia chips, imposed earlier this month. This move is a direct response to the Dutch government's decision to take control of the Dutch-based Chinese company and suspend its CEO after the US raised safety concerns. Although most Nexperia semiconductors are manufactured in Europe, around 70% are packaged in China before distribution, making the Chinese blockade a huge blow to the global automotive industry.

The risk is real: some companies, according to ACEA, already foresee the imminent stoppage of assembly lines.

The shortage of semiconductors, crucial for all electronic systems in vehicles, from dashboards to ignition and transmission systems, is prompting giants such as Mercedes to look for alternative sources globally. But building new production capacity takes months. The same shortage is also creating problems in Japan, where Nissan's Chief Performance Officer Guillaume Cartier said the company is 'only good until the first week of November' in terms of stocks.

Complicating the scenario, President Xi Jinping's decision to also restrict the export of rare earths - fundamental materials for automotive electronics - has aggravated tensions with Europe. A Chinese delegation is expected in Brussels to negotiate, but many observers fear that the 'hardball' strategy adopted by Beijing with Washington is now directly targeting the Old Continent.

Biagio SimonettaRedattore
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Lingue parlate: italiano, inglese
Argomenti: Finanza, Fintech, Silicon Valley, Tecnologia
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