Carmakers get closer over lack of chip supply
Global shortage hot topic of discussion for mainland companies on sidelines of forum
The shortage of vehicle chips is bringing China’s carmakers and semiconductor suppliers closer together than ever before, with representatives from both industries discussing contingency plans on the sidelines of a chip industry event that ended at the weekend.
The China Association of Automobile Manufacturers, which represents the country’s car plants, was a first-time sponsor of the annual three-day Global Semiconductor Industry Expo held in Chongqing.
The supply shortage was one of the hottest topics for debate at the expo as delegates flagged proposals and ideas on how Chinese semiconductor firms can help the country’s industry amid the widespread disruption felt by carmakers around the world.
The lack of chips was “emblematic of insufficient domestic [semiconductor] supply capacity”, association deputy secretary Yao Jie said at a special seminar on the topic on Friday.
“It is necessary to build a platform for better bridging supply and demand,” Yao said, adding that China could tap into existing inventories and production resources to try to ensure carmakers had enough chips to continue production.
Unlike chips designed for the latest smartphones, most electronics used in vehicles can generally be produced on technologies that are not subject to trade sanctions from the US.
Changan Automobile, a Chongqing-based state-owned carmaker with joint ventures with Ford Motor, Mazda Motor Corporation and Suzuki, said it had widened its supplier pool to cope with the shortage.
“We have placed supply chain security very high on our agenda to ensure production,” said Guang Penghui, a senior engineer at Changan Auto’s smart car institute.
Guang said the firm had tackled the shortage by merging tier-1 and tier-2 suppliers into one “vertical procurement platform”, which means it will be able to source from a wider base of suppliers.
Shenzhen-listed Changan sold more than 2 million cars last year, up 14 per cent from 2019.
The effect of the shortage on Chinese carmakers is not known, although there is growing anecdotal evidence pointing to a supply chain crunch. The Ministry of Industry and Information Technology has compiled a list of vehicle chip producers and buyers in China in an attempt to match supply with demand.
A representative from a Qingdao-based electric vehicle brand, in discussing the situation with expo delegates, said the shortage took them by surprise as they had not expected it to be so serious.