The impact of the chip shortage on China's auto industry will continue into next spring due to the Covid-19 outbreak in Malaysia, China Securities Journal said on August 20, citing industry sources.

"We are evaluating the impact of Covid-19 and considering adjusting some product lines to other countries," the report quoted an executive from a chipmaker with production lines in Malaysia as saying.

Malaysia is the world's seventh-largest exporter of semiconductor products, and semiconductor giants including Intel, Infineon, STMicroelectronics, NXP, Texas Instruments, ON Semiconductor, have production bases there.

Malaysia accounts for 8 percent of the global semiconductor back-end packaging market, according to Statista.

STMicroelectronics shut down part of its production line at an assembly plant in Muar, Malaysia, on August 16 and restarted operations on August 18.

Compared to wafer fabs, packaging and testing plants are less automated, so more workers on the line brings a higher risk of Covid-19.

In addition, Covid-19 has had an impact on global logistics, making chip delivery lead times longer.

Chang Wenying, secretary of the board of directors of Chinese semiconductor packaging giant Huatian Technology, said the company's production lines in Malaysia, which include RF and automotive electronics, are running normally, and "automotive electronics are also being supplied normally."

A semiconductor supplier's Muar plant in Malaysia has been asked by the local government to shut down part of its production line until August 21 due to the aggravation of the Covid-19 outbreak, said David Xu, executive vice president of Bosch (China) Investment Co, in his WeChat status on Tuesday.

This will cause Bosch ESP/IPB, VCU, TCU and other chips to be directly affected, and is expected to follow in August basically in a state of supply disruption, Xu said.

On August 19, Russian automaker GAZ Volga said that from August 23 three car production lines at its plant in Tolyatti will be suspended due to a lack of automotive electronic components.

The number of chip factories located in Malaysia directly affects the production of components for semiconductor giants, including Bosch, thus affecting the pace of car production, said Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers (CAAM).

Earlier Geely Group's CEO Jerry Gan Jiayue said the chip shortage brought challenges to Geely's sales and operations in the first half of the year due to the impact of Malaysia's Covid-19.

Geely's new energy brand Geometry currently has orders for more than 10,000 units, but those orders could not be delivered due to the chip shortage.

In early August, 11 companies produced 312,000 vehicles, down 34 percent year-over-year, meaning the chip shortage could cause the Chinese auto market to cut production by 500,000 to 700,000 units in August, according to CAAM.

The auto industry needs industry chain synergy to reasonably control chip inventories and strengthen supply-demand docking to promote the steady and healthy development of China's auto industry, according to Cui Dongshu, secretary-general of the China Passenger Car Association (CPCA).

Auto chip shortage fears return as Malaysia's Covid-19 outbreak worsens

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