The shortage of automotive chips is a temporary imbalance between supply and demand, and supply is expected to improve significantly from July, the China Passenger Car Association (CPCA) said Wednesday.

In terms of auto production, the improvement in chip supply should be evident in August, the CPCA said, adding that the chip problem should be largely resolved by September as more capacity is released.

The CPCA said the shortage of automotive chips is both an imbalance between supply and demand and a disconnect between the technological advances and the industry's main demand.

Most mainstream automotive chips are not used in large quantities compared to other products, and the technology is relatively mature. With the withdrawal of excess capacity, many chip companies adjust their product mix, resulting in insufficient production of low-end chips.

After the improvement of market supply and panic mentality, the contradiction between supply and demand will quickly ease, the CPCA said.

It is worth mentioning that Chen Hong, chairman of SAIC Group, holds the same view.

Chen said on Wednesday at the 2020 annual shareholders' meeting that the chip shortage problem is expected to be eased by late July, and will basically return to normal in the third and fourth quarters of this year.

The chip shortage problem in the automotive industry is the first time encountered, the original car manufacturers and chip manufacturers are not directly linked, the chip shortage incident also let the car manufacturers and chip manufacturers have direct contact, Chen also said.

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(Source: CnEVPost)