What’s new: China’s acute shortage of car chips is gradually easing as chipmakers ramp up production, but demand still outstrips supply, a senior industry official signaled on Monday.
That could continue to affect production schedules for cars and their parts, Xin Guobin, Vice Minister of Industry and Information Technology (MIIT), said at a briefing (link in Chinese) Monday.
But the new-energy vehicle (NEV) sector — which was badly impacted by the shortage because NEVs tend to require more chips — is expected to grow rapidly over the year as more new supply comes online, Xin said.
In December, a Chinese automotive group said the “darkest days” of the chip supply shortage had passed, noting improved monthly output of general passenger vehicles.
The context: Since late 2020, manufacturers across the world have struggled with a semiconductor shortage as supplies failed to meet jumping demand fueled by the digital transformation of various industries amid the global fallout of the Covid-19 pandemic.
Carmaking is one of the industries that was hit hard by the shortage and many companies, both home and abroad, have been forced to reduce production.
Xin said the MIIT had taken a number of measures, including establishing a working group to better coordinate between automotive and chip firms, and initiating probes into unfair competition, chip hoarding and price gouging.
Although the semiconductor shortage may ease this year in some industries, it could persist in the NEV industry as the increased output will still not meet the demand growth of the booming market, analysts at China Industrial Securities Co. Ltd. wrote in a Sunday note.
Related: Cover Story: How a Perfect Storm Created a Global Chip Shortage
Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)
Get our weekly free Must-Read newsletter.
