Chinese Government Urges Domestic Companies to Increase Semiconductor Production

(Photo by SCMP)

[Asia Economy Reporter Yujin Cho] As the global semiconductor supply shortage intensifies, the Chinese government has urged domestic semiconductor manufacturers to resume production.

According to the South China Morning Post (SCMP) in Hong Kong on the 14th, China's Ministry of Industry and Information Technology stated, "The current semiconductor supply shortage remains quite severe."

At a press conference held the previous day, spokesperson Tian Yulong said, "The semiconductor supply chain is expected to remain tight for the time being," adding, "We are urging domestic semiconductor companies to resume production to resolve supply issues for specific chips."

He emphasized that the supply-demand imbalance has been caused by the slow expansion of semiconductor production due to the COVID-19 pandemic, and the situation has become more complicated especially as factories in major semiconductor manufacturing regions like Taiwan have been shut down.

The Ministry of Industry and Information Technology has formed a separate team to address the semiconductor supply shortage and has begun supporting the resolution of supply issues between the automotive industry, which has been hit hardest by the shortage, and semiconductor manufacturers.

On the 10th, China's market regulatory agency, the State Administration for Market Regulation (SAMR), announced that it fined three automotive semiconductor manufacturers a total of 2.5 million yuan (approximately 450 million KRW) for deliberately increasing stockpiles to raise prices.

The global semiconductor shortage began in the second quarter of last year and has worsened as the COVID-19 pandemic deepened.

The 'just-in-time' production method, which supplies parts almost simultaneously with orders to reduce inventory burdens, was disrupted by logistics issues caused by COVID-19, the Texas cold wave in the U.S., and a fire at Renesas in Japan, among other unforeseen factors.

According to market research firm IHS Markit, the shortage of automotive semiconductors is expected to continue until the first quarter of next year, with a possibility of extending into the second quarter.

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