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Domestic automakers cut production due to chip shortage

By Wang Junwei | | Updated: 2021-03-31 17:27
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An FAW employee works on an assembly line in Changchun, Jilin province, in September, 2020. [Photo/Xinhua]

China's domestic automakers cut their production by 5 to 8 percent due to a chip shortage from January to February this year, Securities Times reported on Wednesday, citing a senior executive from an auto industry association of the country.

Li Shaohua, deputy secretary-general of the China Association of Automobile Manufacturers, said the global chip shortage is hitting many industries, not only automobiles, but in fields like consumer electronics, communication systems and medical equipment. At the same time, the imbalance between supply and demand has caused a sharp rise in the prices of various chips.

The supply shortage, caused by various factors, will continue in the next six or even nine months, Li predicted, and a supply and demand balance can be achieved in about the third quarter of this year.

To promote the development of domestic automobile chips, China needs to make breakthroughs in key areas, according to Li. It is necessary to conduct targeted guidance and support as per the differences in core functions and production processes of chips. And China also needs to further introduce international top-class chip companies to improve its supply chain.

Globally, carmakers such as Ford, Fiat Chrysler, Volkswagen, General Motors and Honda announced the temporary closure of their plants in the United States, Canada and Mexico in the first quarter, which could lose 230,000 units of vehicle production in these regions in the first quarter, a 5.8 percent decrease of output, according to a report from Oxford Economics. At the same time, the report predicted that the chip shortage will reduce light vehicle production by 200,000 units in the European automotive market, a 4.1 percent shortfall in production.

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