China, where over 25 million vehicles were sold last year, become a ray of hope for automakers, including VW and General Motors, as the global auto industry was hit hard by the pandemic.
However, China is also where news of the auto chip shortage first emerged last year. The shortage was worsened by a fire in Renesas Electronics’ chip factory in Japan in March.
In 2019, automotive groups accounted for roughly a tenth of the $429 billion semiconductor market, according to McKinsey, with NXP Semiconductor, Germany’s Infineon and Renesas among key suppliers to the sector.
Automakers, including Nissan, Ford and Nio said they cut production due to the chip supply shortage.
Li Shaohua, senior official at China Association of Automobile Manufacturers, said chip supply shortage hit auto production by 5 percent to 8 percent in the first two months this year and expects the impact to ease from the third quarter of this year.
As a result, China Automobile Dealers Association, said it expects car inventory to continue to drop in China as the chip shortage hits overall auto production. Supply of some car models might not be able to meet demand, it said.
