Chip shortage poses challenge to car production in China

BEIJING -- The second and third waves of COVID-19 and consequent industrial production disruptions in parts of Europe have caused a shortage in semiconductor chips at the same time as demand from China is rising sharply.

In a research report, ANZ Bank says a supply shortfall may delay the recovery of China's industrial sectors, such as automobile manufacturing, which played a prominent role in China's rebound earlier in the year.

"Production growth of China's auto sector slowed to 11.1% y/y in November from 14.7% prior, which may be an early sign of the impact of chip shortages," the report says."

"A 50% drop in auto production growth from the pace it has reached since Q2 could drag down overall industrial production (IP) growth by 0.7-0.8%.

"However, we expect any negative impact to be temporary, dissipating when the pandemic situation in key chip-making locations comes under control in 2021."

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