Ford Supplier Warns Customers Could Seek Chip-Shortage Damages

Visteon Corp., an auto supplier whose top customer is Ford Motor Co., flagged to investors that unidentified carmakers may seek compensation for computer chip shortages crimping vehicle production.

The Van Buren Township, Michigan-based components maker said in a quarterly filing Thursday that semiconductor suppliers have at times been unable to deliver sufficient chips.

“This has led certain customers to allege that the company has contributed to production reductions,” Visteon said, referring to itself. “As a result, these customers have communicated that they expect the company to absorb some of the financial impact of those reductions and are reserving their rights to claim damages arising from the supply shortages.”

Ford, which spun off the parts maker in 2000, is still Visteon’s largest customer by far, according to data compiled by Bloomberg. The automaker accounted for 22% of the supplier’s revenue last year, followed by 11% apiece for Mazda Motor Corp. and BMW AG.

Visteon’s disclosure follows Ford’s warning Wednesday that it expects scarce chip supplies to be a $2.5 billion drag on earnings this year. The maker of F-Series pickups and Mustang sports cars expects to lose about 50% of planned second-quarter production due to the shortage.

Ford shares fell as much as 10% on Thursday, while Visteon gained as much as 3.8% after reporting better-than-expected quarterly earnings and net sales.

©2021 Bloomberg L.P.

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