Volkswagen, China’s biggest foreign automaker, might stop part of its operations in the country amid U.S. sanctions that restrict the flow of microchips to China.
Volkswagen runs three joint ventures in China. One of them halted operations earlier this month. The second will soon follow suit.
Combined, those two ventures can produce more than 200,000 cars a month.
Just like in smartphones and other technology, chips act as the brain of the car. They’re responsible for monitoring the car’s sensors every time the engine starts.
The White House is blocking Chinese companies from using American-made chips, including chips made using American technology. The imposed sanctions specially target companies with military and political ties to the Chinese Communist Party.
The German carmaker launched its first joint venture in China in 1984. It delivered more than 4 million cars to Chinese customers last year.
