Beijing (ZXZC)- Chip shortage could cost China nearly 2 million vehicles out of local automakers’ production plans, Chen Bin, vice chairman of China Machinery Industry Federation (CMIF), stated at a conference today.

Photo credit: Black Sesame

The vice-chairman explained, as the largest auto market globally, China’s vehicle production and sales volume have been leading the world for more than a decade. However, from May to September this year, with the chip shortage affecting local market, domestic auto production and sales continued to drop year on year.

People within the manufacturing industry pointed out that basic components such as chips, sensors, and development software are relatively neglected by manufacturers, compared to consumer electronics and IT terminals, due to the vast profit disparity between the two.

The biggest obstacle is institutional, the vice chairman added. The fragile automotive supply chain ecosystem reflected the lack of synergy among manufacturers in China. Therefore, establishing a reliable and controllable domestic supply chain is a national priority. 

During the past decade, the domestic machine tool industry has progressed rapidly, with significantly improved product quality, precision, and reliability, and is still growing. The vice-chairman urged automakers and auto parts manufacturers to give the said industry more attention and support.