Chinese car makers cut production by 5% to 8% in Jan-Feb due to chip shortages

Chinese vehicle manufacturers cut production by 5 to 8 percent in the first two months of the year due to chip shortages, a Chinese official said recently.

The contradiction between supply and demand of automotive chips should be examined from both short-term and long-term perspectives, said Li Shaohua, deputy secretary-general of the China Association of Automobile Manufacturers, at a recent salon held by stcn.com.

In the short term, the shortage of automotive chips is a problem of imbalance between supply and demand in the market, which cannot be solved through administrative means, Li said.

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In the medium to long term, it is a problem of China's auto industry chain relying on overseas, and the industry must pay great attention to accelerate the realization of China's auto industry chain as autonomous and controllable, Li said.

Li said the chip shortage has become a global problem. Not only the automotive industry but also consumer electronics, communication systems, and medical instruments are facing chip shortages. This imbalance between supply and demand has caused a significant increase in the price of various types of chips.

In the next six months or even nine months, the automotive chip supply and demand mismatch and imbalance problem will persist, and is expected to enter a new supply and demand balance phase-only around the third quarter of this year, he said.

"Auto companies are all currently working to adjust production plans for chip shortage models to ensure that auto production is not affected or is less affected." Li expects that auto production and sales will be boosted in the second half of this year as the chip shortage is eased.

Li said the problems facing China's automotive chip products include the lack of a standards system and verification means, the lack of core component companies, and the high technical threshold for vehicle-grade chips.

In his view, automotive chip projects take at least a decade from formation to profitability, which requires sufficient time for government policy support to ensure the sustainability of the project and industry development.