Daily Management Review

China's Auto Industry Recovery Put At Threat Be Semiconductor Shortage


China's Auto Industry Recovery Put At Threat Be Semiconductor Shortage
The shortage of semiconductors has also affected auto production in in China after there were hopes that the largest car market of the world would lead a global recovery of the industry, however many executives of the auto industry are now rattled by the shortage and its China hit.
The global shortage of semiconductor chips has forced global auto companies around the world to adjust the assembly lines which have been caused by manufacturing delays. According to some semiconductor manufacturers this shortage in auto chips is because of a quicker than expected rebound for the auto industry form the pandemic lows.
Even in the second quarter of the current year, the impact of the shortage of auto chips is going on unabated, said the German auto major Volkswagen AG, which is also the biggest foreign auto maker in China and which wants to sell over four million vehicles in the country.
It was difficult for the company to make an accurate assessment of the potential production loss for the company week to week or even month to month due to the global auto chip shortage, said Stephan Woellenstein, Volkswagen's China chief, while talking to reporters.
"It's really like fire-fighting... In some cases, we have switched to another chip so we changed suppliers," he said in Shanghai which is holding one of the largest auto shows.
Last year, more than 25 million vehicles were sold in the Chinese market which had made the industry hopeful with companies including Volkswagen and General Motors becoming optimistic about the market and their recovery form the lows that were hit during the pandemic in 2020.
However, the first reports of the auto chip shortages had emerged from China sometime last year. A fire in Renesas Electronics' chip factory in Japan in March has worsened the shortage.
According to McKinsey, about one tenth of the $429 billion global semiconductor market was accounted for by automotive making companies in 2019 and the key suppliers top the market included NXP Semiconductor, Germany's Infineon and Renesas.
The shortage in supply of auto chips has forced curbing of production in a large number of auto companies including Nissan Motor, Ford Motor and Nio Inc, the companies said.
In the first two months this year, auto production was hit by 5 per cent to 8 per cent in China, said Li Shaohua, senior official at China Association of Automobile Manufacturers, and added that it was expected that the shortage would gradually ease out starting in the third quarter of this year. 
As a result of this , it was expected that there would be a continued drop in car inventories in China with the chip shortage slated to impact the overall auto production in the country, said China Automobile Dealers Association. It said that there can also be an imbalance in the supply and demand for some car models.