China’s automotive chip shortage could persist for as long as a decade , but according to industry insiders the problems go deeper than current supply glitches.
Short-term disruptions caused by Covid-19 will resolve naturally, according to general manager of the National New Energy Vehicle Technology Innovation Center, Yuan Chengyin. However, more serious issues such as overwhelming domestic demand for electric vehicles, a lack of domestic technical knowhow and sustained geopolitical tensions will strangle supply.
“China’s chip industry is under tremendous pressure,” Yuan told Bloomberg. “I don’t think the issue can be solved overnight.”
Auto News reports that China’s Association of Automobile Manufacturers believes the current chip shortages may persist into the second quarter, but Yuan sees a more systemic longer-term problem that won’t be resolved until Chinese companies build up their own manufacturing capabilities and make the semiconductors used in EVs.
“That’s the huge challenge,” said Yuan, who’s also behind the country’s first government-backed car-chip industry body, the China Automotive Chip Industry Innovation Strategic Alliance. “If we don’t address it, the auto industry could go back to where it was decades ago” in terms of competitiveness.
China is the world’s biggest automotive market, with wholesale deliveries totaling 25.3 million units in 2020. Vehicle sales are expected to increase this year for the first time since 2017, reaching about 27.2 million units, says Auto News.
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