China’s EV industry may go into partial freeze in 2022 as global chip shortage leaves 1 million vehicles short of vital components

Global foundries can produce enough semiconductor chips and microcontrollers to supply 4 million electric cars in China, according to an industry guild

That leaves a shortfall of 1 million vehicles in a market where demand may jump to 5 million units in 2022, the China Passenger Car Association said

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The production line of new-energy vehicles in the Yunnan provincial capital of Kunming in southwest China on December 3, 2020. Photo: Xinhua

Published: 6:30pm, 27 Dec 2021

A chill may partially freeze China’s booming electric car industry in the first half of 2022, as the global chip shortage forces smaller assemblies to suspend production, according to a forecast by the industry guild of the world’s largest vehicle market.

Global foundries can produce enough semiconductors, microcontroller units and high-end chips with artificial intelligence (AI) processors for 4 million of the so-called new energy vehicles (NEVs) in China, according to the China Passenger Car Association (CPCA). That leaves a shortfall of 1 million vehicles, based on the industry guild’s forecast of China’s NEV demand in 2022.

“The shortage of automotive chips that had hindered the growth of the car market has yet to ease,” the CPCA said in a research report early this month. “The bestselling models still need chips to reinforce their production, and get their backlog of orders executed.”

The dire forecast shows how the ripple effects since late 2020 from the miscalculation of global demand by foundries continue to be felt, and are showing no sign of abating. A resurgence of Covid-19 infections around Southeast Asia this recent summer disrupted production at several chip foundries, exacerbating the pressure on a straining semiconductor supply chain in the third quarter.

Silicon wafer negative color in die attach machine in semiconductor manufacturing. Photo: Shutterstock.

Key automotive chip suppliers to China’s carmakers include Germany’s Infineon Technologies, Dutch firm NXP Semiconductors, Texas Instruments of the United States and Japan’s Renesas Electronics, with some of their production lines located in Southeast Asia.

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