Mercedes CEO says carmaker is scurrying for chips after Nexperia nationalization

By Steve Goldstein

Mercedes is scrambling for microchips.

The chief executive of Mercedes-Benz said the luxury automaker is "scurrying" around looking for alternatives after a key microchip maker was caught in the geopolitical crossfire between the U.S. and China.

Key automotive microchip maker Nexperia, held by China's Wingtech (CN:600745), was nationalized earlier this month by the Dutch government, while its China arm has reduced production.

"In a modern high-tech car, you have pretty much all five continents inside that modern car," Mercedes CEO Ola Kallenius said, according to a transcript of an earnings call from FactSet. "And there are many nodes across many components and technologies that provide a large share - in some case, the full share of what modern cars need. Nexperia happens to be one of those nodes, albeit with relatively straightforward components, but components that you find in many, many, many subassemblies, [engine control units], et cetera."

He said the current situation is different than the chip-supply shortage caused by the COVID-19 pandemic.

"This is a politically induced situation where one of those nodes have been hit, which means that the solution to this or the resolution to this resides in the political [arena] primarily between the United States and China, in this case, with Europe kind of caught in the middle," he said. "For the short term, we're covered. And it goes without saying that we're scurrying around the world to look for alternatives. But I don't want to make a prediction at this stage how the whole thing plays out, so I'll leave it at that," he said.

Mercedes shares (XE:MBG) jumped 6% after its third-quarter adjusted earnings before interest and tax of EUR2.1 billion topped expectations of EUR1.8 billion. Its car division's 4.8% margin was favorably received, given its previous guidance of the lower end of a 4% to 6% range. The results - and particularly its free cash flow - triggered a resumption of its stock buyback program worth up to EUR2 billion over 12 months.

"We think resuming [the stock buyback program] was expected by consensus but the relatively high amount sends a signal of confidence," said analysts at UBS.

While better than expected, Mercedes did suffer through a tough quarter, with net profit down 31% on a 7% slide in revenue.

Deliveries of cars fell 12% thanks to U.S. tariffs and a tough Chinese environment, though unit sales of top-end vehicles actually grew by 10%.

-Steve Goldstein

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10-29-25 0803ET