The CAAM believes that due to the shortage of chip supply, the production of some companies may be greatly affected in the first quarter of next year.

The China Association of Automobile Manufacturers (CAAM) has downplayed the impact of the recent chip shortage on auto production in China, which has generated much discussion.

The chip supply shortage that has been the focus of media reports is real, but not as serious as some have suggested, AutoReview quoted Li Shaohua, deputy secretary-general at the CAAM, as saying.

As an automotive industry organization, the CAAM has been closely monitoring chip supply issues and has been in close communication with its key members and representative companies in the supply chain, Li said.

At the time of this discussion, the CAAM immediately conducted a survey on chip supply and its subsequent impact on the production of over 60 vehicle manufacturers, parts manufacturers and related technology companies through various communication methods, and submitted the survey results to the regulatory authorities.

From the feedback of the enterprises, the main reasons for the chip supply shortage in some enterprises are as follows:

In recent years, the global chip industry capacity investment is relatively conservative, supply and demand imbalance has been manifested before the occurrence of Covide-19. The epidemic has exacerbated the company's cautious on capacity expansion, the first half of the chip industry on the consumer electronics and automotive market forecast is conservative, the second half of the year the development of China's auto market tend to good prediction and inadequate preparation.

Driven by the development of 5G technology, the demand for chips in the field of consumer electronics is increasing rapidly this year, the chip production capacity has encountered challenges and seized part of the automotive chip capacity.

This trend is likely to further intensify in 2021, while many chip manufacturers are cutting back on necessary capital expenditures, raising prices, and lowering production quotas for chips in the automotive industry.

Europe and Southeast Asia by the second wave of Covid-19, the major chip suppliers to reduce capacity or shut down factories have occurred, which further exacerbated the imbalance between supply and demand for chips, resulting in some downstream enterprises, chip shortages, and even the risk of supply cuts.

Along with the increasing degree of electrification, intelligence, and network connectivity of automobiles, the value of automotive chips per vehicle continues to increase, promoting the demand for global automotive chips will be faster than the growth rate of vehicle sales, which also directly caused the imbalance between supply and demand for chips.

Li believes that due to the shortage of chip supply, the production of some companies may be greatly affected in the first quarter of next year.

However, for the whole of next year, the impact of the chip shortage will not be too large, it is difficult to make a quantitative estimate, he said, adding that the various links in the industry chain enterprises are lengthening the stocking cycle, coupled with the short term chip production capacity is still insufficient, chip prices are rising or inevitable.

Li also stressed that all aspects of the Chinese automotive industry should be a rational view of the imbalance between supply and demand of chips, the market-level influences will be gradually alleviated with the passage of time.

This past weekend, the news of VW's production halt due to chip supply constraints spread quickly through the Chinese auto industry.

Chinese media quoted FAW-Volkswagen insiders as saying that its production had been affected to some extent, but it was far from being "alarmist" as the news and rumors had it.

SAIC-Volkswagen sources also said, "SAIC-Volkswagen has not completely stopped production, but has only made adjustments to individual models in stages.

A spokesperson for Nio told cnTechPost in Chinese which translated as "there is no impact at this time, Nio has been prepared in advance."

Chinese media quoted Xpeng and Li Auto as saying that they were not affected and that production and operations were normal. Previous data showed that although some of the new carmakers in China have a triple-digit year-on-year growth rate in monthly deliveries, they are less affected because their base is smaller and they take up fewer resources for components, including chips.