According to SCMP, the ongoing global chip shortage has left electric car buyers in China with several months to wait for newly purchased vehicles, as assemblers and component manufacturers struggle to keep up with demand.

A semiconductor supply shortage began in the automotive industry during the COVID-19 pandemic. The shortage began in the first half of 2020 when consumer demand for cars fell overall during the lockdown. This forced chip manufacturers to shift their efforts to other markets, such as computer equipment and mobile devices, which increased demand as more people worked remotely. However, the opposite occurred. Shoppers rushed to buy cars to avoid public transportation, but it takes a long time for semiconductor companies to increase chip manufacturing output.

The International Data Corporation, IDC, attributes this to a lack of investment in mature process technology, as many critical components for the automotive industry and other industries are manufactured using these older processes. In 2021, IDC estimated that 67% of semiconductors were manufactured at mature process nodes.

Additionally, chip dealers’ stockpiling of chips is another factor in the soaring chip prices.

According to Apollo News, the price of an STMicroelectronics core chip has increased significantly in Shanghai’s SEG electronics market this year. Market merchants pointed out that the chip’s original price was 20 yuan (3.17 dollars) per piece, but has been inflated to 2800 yuan (443.2 dollars) per piece, excluding tax, but many merchants are out of stock.

Chinese chip maker Semiconductor Manufacturing International Corp saw a surge in business due to a global chip shortage. As Bloomberg reported on Thursday, February 10, SMIC announced a sales increase of 39% and hit the annual record of 5.4 million dollars in the 2021 fourth quarter report.

Nina Turner, research manager with IDC’s Enabling Technologies and Semiconductor team, said, “Adding in the time to manufacture the vehicle, this means the automotive market will begin to improve towards the end of 2022 and into 2023 if there are no other supply chain shocks.”

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