Nio casualty of global chip storage

NIO will temporarily halt production at one of its factories in Anhui province because of the semiconductor shortage, becoming the first high-profile Chinese carmaker to succumb to a chip snarl that has silenced the factory lines of auto manufacturers globally.

Nio’s JAC-NIO plant in the central provincial capital of Hefei will cease operations for five working days starting from March 29, the company said in a statement Friday.

“The overall supply constraint of semiconductors has impacted the company’s production volume in March,” Shanghai-based Nio said.

“The company expects to deliver approximately 19 500 vehicles in the first quarter, adjusted from previously released outlook of 20 000 to 20 500 vehicles.”

Carmakers the world over have expanded and extended production cuts that first began in late December to cope with a worsening global shortage of semiconductors.

The coronavirus caused a surge in chip orders that are needed for smartphones, TVs and computers as people try to make extended life at home more bearable, leaving less capacity for a stronger-than-expected rebound in vehicle demand.

Recent weather-related disruptions of petrochemical supplies in the southern US and a fire at a chipmaking plant in Japan have exacerbated the shutdowns.

Nio posted a wider-than-expected loss in the fourth quarter, a year after a government cash injection saved the company from bankruptcy.

The US listed company’s shares climbed more than 1 100 percent in 2020, pulled higher by excitement around the prospects for growth in China’s EV market, which is the world’s biggest.

“Though we believe we are able to meet expected demand for the second-quarter, there is indeed a higher risk.”