Chinese carmakers sidestep chip shortage troubles to grow sales, market share at the expense of global rivals

Name: There’s a global semiconductor shortage and this is why it matters
Uploaded: 2021-09-09T07:30:51.000Z
Duration: 6 min 1 s
Description: There’s a global semiconductor shortage and this is why it matters

Home-grown vehicle brands increased their market share to 43.1 per cent in July from 36.5 per cent in January

Carmakers relied on alternative supplies and reduced chip usage in basic models to help sustain buoyant sales while improving their profit margins

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Employees work on the production line at Hefei Changan Automobile factory in Hefei in eastern Anhui province in February 2021. Photo: Xinhua

Daniel Renin Shanghai

Published: 3:30pm, 9 Sep 2021Updated: 9:34pm, 9 Sep 2021

Chinese carmakers sold more vehicles and grabbed more market share from their rivals at home in the first half this year by adopting a flexible supply chain management to sidestep an acute chip shortage plaguing the industry.

Local proprietary vehicle brands increased their market share to 43.1 per cent in July from 36.5 per cent in January, according to Fitch Ratings in a report published on Tuesday. That translated into total deliveries of more than 6 million units in the first half of this year.

A global shortage of semiconductors used in cars since late 2020 has been affecting all major assemblers as factories attempted to catch up with demand as more economies reopened earlier this year while the pandemic eased. China spent US$38 billion in June to import 51.9 billion semiconductor devices, the third-biggest volume after March and April, official data showed.

“China’s domestic companies turned out to be more flexible in dealing with the chip shortage crisis,” said Peter Chen, an engineer with car components company ZF TRW in Shanghai. “They planned ahead to secure more supplies of chips when the Chinese car market recovered from the Covid-19 outbreak in the middle of last year.”

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There’s a global semiconductor shortage and this is why it matters

Traditional and electric-car makers consume high volumes of microcontrollers for engine control and in electronic systems. Chips are now a key component in building a vehicle as the pace of electrification and digitalisation accelerates.

Still, the world’s biggest passenger car market suffered a setback in July as a resurgence in coronavirus cases in several mainland provinces and abroad further disrupted chip supply. Deliveries fell 6.2 per cent to 1.5 million units from a year earlier, or 4.9 per cent from a month earlier, according to the China Passenger Car Association.