Chinese Automotive Chip Crisis Ends: Why It May Be Good News in Europe and the US Industry

Chinese automakers CPCA announced at the November production report presentation that “the darkest days” in the semiconductor crisis are already “third quarter history.” Activity grew 14% compared to last month, and there was also a significant rebound in inventories. The figures presented today raise hope in the rest of the world. China is one of the most important links in the global production chain. If the Asian giant is supplied, the production of chips can reach more manufacturers.

The Chinese automobile industry has suffered as well as the rest of the shortage of semiconductors and other electrical components for cars. During the third quarter of the year, the decrease in production exceeded 10% in all months. The manufacture of vehicles bottomed out, dragging sales by 48% annually due to the “shortage of chips”, they explain from the association of manufacturers of tourism of China. But “the dark days” are coming to an end, they have announced in the presentation of the November sales and production report, according to Caixin Global.

The manufacturing rose 14% in monthly terms and manufacturers hope to regain pre-pandemic production levels “once the worst time is over.” The rebound in activity has not made it possible to reach this milestone, but it does allow the industry to quickly replenish its inventory. At the end of November, the manufacturer’s inventory increased by 80,000 units from the previous month and the channel inventory increased by 190,000 units from the previous month. That this rebound has occurred is key for the Chinese sector, because the period of the year with the most sales is the months before the spring break at the end of the Chinese year.

This year, automakers have been forced to cut production due to limited access to chips, which are indispensable for automotive microprocessors that control engines, transmissions, emissions controls, automated driving functions and other vehicle systems every time. more technological.

But the announcement may have a greater reach than in China itself. The Asian giant is an important link in the global semiconductor chain. Taiwan and Korea are the main chip producers, the Asian giant occupies a privileged position due to its assembly and packaging capacity. As in the energy crisis, China’s pulse has not shaken to attract imports of chips to increase its own production. According to some Chinese media, such as the South China Morning Post, the country has accelerated the chip production capacity to try to get out of the crisis. Semiconductor production grew at rates of 40%. That means that if China manages to be supplied it can contribute to the stabilization of the global semiconductor chain.

Regarding sales of passenger cars, in November the figure of 1,816 million was reached, which is 12.7% less than last year and 6% less than in 2019. Already at the end of 2020, giants such as Volkswagen and Ford began to raise alarms about the global chip shortage, which was triggered by the Covid-19 pandemic. The semiconductor crisis and its impact on the industry was the beginning of the great supply crisis that world trade is undergoing. At the end of 2020, already at the end of 2020, giants such as Volkswagen and Ford began to warn about the global shortage of chips. The pandemic aggravated the situation. Manufacturers slashed their business projections and semiconductor orders. The stronger-than-expected recovery in the second half of last year left IC manufacturers and suppliers off guard as production failed to catch up with strong demand.