China's chip shortage may ease in the 4th quarter

The chip shortage in the automotive industry, which has hit sales and production in the domestic market, is expected to ease in the fourth quarter, the top industry regulator said on Tuesday.

The shortage has "obviously hit" the industry and its capacity and caused short-term disruption of production.

But the situation began improving in the fourth quarter, a senior official at the Ministry of Industry and Information Technology said.

China has established a special team to deal with the chip shortage. The entire supply chain has been improved and the situation will become even better in the current quarter, the ministry said during an online conference.

Due to the shortage, China's car sales dropped 19.6 percent to 20.67 million units in September.

Production capacity fell 17.9 percent to 20.77 million units last month – abnormal falls, the MIIT said.

Since the first half, the chip industry has faced a supply shortage because of the impact of the coronavirus pandemic on factories and shipping, natural disasters in Japan and the United States and more firms entering the new-energy vehicle sector, analysts said.

To navigate such a bottleneck, Chinese auto companies and chip makers need joint efforts in technological innovation and upgrading to stabilize production and bolster supply chains, industry officials said.

Also on Tuesday, Xiaomi Corp announced it will start producing NEVs in the first half of 2024, earlier than expected, CEO Lei Jun said on his Weibo account.