China to Strictly Punish Illegal Activities Such as Hoarding Vehicle Chips

State Administration for Market Regulation Conducts Preliminary Monitoring and Investigates Some Distributors
China's Vehicle Chip Shortage Expected to Persist for the Time Being

[Asia Economy Beijing=Special Correspondent Jo Young-shin] China's State Administration for Market Regulation has investigated distributors who arbitrarily raised prices of semiconductor chips for automobiles, Chinese economic media Caixin reported on the 4th.

Caixin reported that the regulatory authorities monitored the prices of automotive chips and conducted investigations on distributors based on the results. Caixin added that the authorities plan to strictly punish illegal activities such as hoarding of important goods like automotive chips.

The media outlet conveyed the market situation, stating that a shortage of automotive chips has recently occurred, causing difficulties for automobile manufacturers, and some distributors have significantly raised prices through hoarding and other means.

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Regarding the chip shortage, Caixin diagnosed that the shortage occurred due to incorrect automobile demand forecasts. Although a decrease in automobile production was predicted, the automotive market rapidly recovered in the second half of last year, leading to the chip shortage. Caixin analyzed that semiconductor chip manufacturers focused more on producing chips for electronics such as home appliances rather than automotive chips, exacerbating the shortage.

Quoting experts, Caixin forecasted that not only automotive chips but also chips used in electronics such as smartphones and home networks are in short supply, and the automotive chip shortage could continue until 2022.

It also pointed out that Chinese companies' efforts to develop their own automotive chips have been insufficient so far, with the scale of China's automotive chip industry accounting for only 4.5% of the global total.

The automotive chip shortage is also affecting automobile production and sales in China. According to the China Association of Automobile Manufacturers, automobile sales in China in June totaled 2,015,000 units, a 12.4% decrease compared to the same month last year. This is a further decline from last year when sales had already decreased due to COVID-19.

The Beijing KOTRA Trade Center stated, "Although China is striving to build a supply chain for automotive chips, there is a gap in the global market and technology," and forecasted, "Supply instability of automotive chips may continue for the time being."

This content was produced with the assistance of AI translation services.