Beijing intervenes to ease chip shortage, prevent disruptions in domestic car production

Tracy Qu
·3-min read

China has stepped in to help ease disruptions in domestic car manufacturing due to chip shortages by publishing a handbook listing suppliers of car chips and demands from carmakers, according to a state-run television network.

The car industry, which makes one in every three cars in the world, is bearing the brunt of a global shortage as the nation relies on imports for over 90 per cent of its semiconductor parts, according to government data . Vehicle output fell 15.9 per cent in January to 2.4 million units from a month earlier, according to the China Association of Automobile Manufacturers.

The Ministry of Industry and Information Technology has intervened to help bridge demand and supply in chips to reduce disruptions, China Central Television (CCTV) said on Friday. A special meeting was held by the ministry to help carmakers identify sources of supply, according to the broadcast.

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The ministry has compiled a handbook containing 568 products from 59 semiconductor companies for major vehicle chips including computing, control and communications parts, and 1,000 pieces of product demand information sought by carmakers, CCTV said.

China will promote the improvement of car chip manufacturing at home following the shortage problem, according to the CCTV report, citing Qiao Yueshan, an official at the Chinese ministry.

Capacities at global chip producers are stretched as they struggle to cope with demand as auto and electronic makers experienced a sharp turn in sales amid signs the Covid-19 pandemic is subsiding and more economies are reopened. Beijing’s efforts mirror attempts by the US and European governments to fix the broken supply chains.

US carmakers including Ford, General Motors and Tesla have reportedly halted their production recently as the shortage spiralled into multiple industries. Taiwan Semiconductor Manufacturing as well as contract producers instead have been busy meeting a surge in demand for gadgets that help housebound consumers, according to a Bloomberg report.

The Post reported in December that lockdowns in Europe have disrupted the production of chips, a key component that China-based carmakers and car part suppliers need to maintain operations, citing three industry officials.

The disruption was particularly acute for Chinese carmakers due to strong underlying demand from local consumers. Sales of passenger cars rose 25.7 per cent to 2.16 million in January from a year earlier, according to the China Passenger Car Association. It was the strongest growth since September 2016, reflecting the base effect following shutdowns at the onset of pandemic.a

The ministry’s handbook would serve as an information bridge for carmakers and semiconductor companies, and help both sides to “innovate and develop together,” CCTV said, citing Sun Fengchun, an academician at the Chinese Academy of Engineering.

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