Local Chinese firms can meet less than 5% of auto chip demand

With the rapid development of smart cars in China, the dependence of chip supply on overseas markets has become a focus of attention.

Chinese local companies can only meet 15 percent of domestic semiconductor demand and less than 5 percent in the field of automotive chips, Ye Chengji, chief engineer and deputy secretary-general of China Association of Automobile Manufacturers (CAAM), said on June 19 at China Auto Forum.

Among the various types of chips, MCU control chips are the most in short supply, and Chinese companies are the weakest in this area, he said.

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The chip shortage has become a global problem. Due to the current automotive chip supply gap, recovery cycle, and other information is not clear, the market has seen chip distributors hoarding and increasing prices significantly.

At the same time, companies also choose to stock up in large quantities and raise chip inventories to protect against future risks, further exacerbating the current chip shortage dilemma, Ye said.

The shortage of automotive chips will peak in the second quarter of this year and is optimistically expected to start easing in the second half of this year, according to CAAM's previous forecast.

When there is no shortage of chips in the automotive industry, the rest of the industry and then after six months of cyclical adjustment, the semiconductor industry supply is expected to return to balance by the end of 2022, Ye said.

Earlier this month, William Li, founder, chairman, and CEO of Nio, said China's automotive industry should coordinate with each other to meet the challenge together.

At the China Auto Chongqing Summit 2021 on June 13, Li said each car company has a different chip shortage, so he called for the industry to create a chip coordination group to better balance supply and demand.

The chip shortage is a global problem, not just for China's auto industry, but also for the Japanese, German and US auto industries, Li said, adding that overall it is a short-term supply-demand imbalance.