Homayune Ghaussi discussed the potential impact from the Russian invasion of Ukraine on the global automotive supply chain in an article titled, "Russia’s Ukraine invasion could trigger a second microchip crisis” in this week’s Automotive News and its sister publication Automotive News Europe.
Ukraine produces approximately 70% of the world’s neon, an ingredient in the development of the automotive microchips already in such critically short supply that numerous plants have been forced to temporarily suspend production awaiting deliveries. In addition to raw materials, the article suggests that economic sanctions placed on Russia will disrupt the global banking systems delaying cross-border payments between suppliers.
Ghaussi, who chairs Warner’s Supply Chain Litigation Practice Group, said: "For clients that have Russian or Russian-related companies in their supply chains, one of their main concerns is will those companies be able to make payments — and will they be able to receive payments depending on their banking? Companies in the U.S. probably won't be affected as much, but I expect that some of that banking will be tied back to Russian banks."
Ghaussi said the invasion will undoubtedly have far reaching impacts into the interconnected global supply chain. It’s important for suppliers to get better visibility into their respective supply chains to understand where their risks may lie. "You might not have a direct relationship with someone who's affected by this, but there might be a supplier somewhere along the way that is," he said.
The attorneys in Warner’s Automotive Industry Group are closely monitoring impacts from the Russian invasion and developing strategies to help suppliers assess their risks.