Bribery isn’t commonplace, but it’s also not unheard of. Chip supplier employees are sometimes paid to steal chips that have been allocated to an automaker, people familiar with the matter said. Aware of such misconduct, one Chinese car company has begun dispatching staff to oversee delivery of their semiconductors. An employee then sits alongside the parts maker's production line to make sure that the chips are used in their products and any left over are properly locked away, according to a person familiar with the arrangement.

Instead of paying by installments — the conventional way of automotive chip supply — all transactions in the gray market are paid in cash.

“Just as important is that chips wear out over time, so reused chips might fail much sooner than expected. I’m not aware of any practical way to detect this problem other than re-doing factory qualifications for temperature ranges and reverse engineering to check for signs of repackaging.” These chips can easily slip into vehicles unnoticed, he said.

Faced with such immediate demand for chips, almost all car companies have chosen to compromise, at a minimum by accepting chips with older production dates. Before Covid, automakers typically only used chips produced in the past 12 months; now many are using semiconductors made four or five years ago, so long as they’re the right type.

“Newer vehicles might not ever have been tested to see if they can survive the defects in the older chips,” he said.