Automobile chip dealers are suspected of driving up prices, and the regulatory authorities promised to severely punish the behavior of hoarding and driving up prices.
Chinese regulators said on Tuesday that they are investigating chip distributors in the auto industry on the grounds that they are suspected of driving up prices.
The actions of the State Administration for Market Regulation (SAMR) are the latest in a regulatory crackdown over the past year. The crackdown has targeted a range of companies and industries as the Chinese government has suppressed the industry.
The agency said in a statement that based on price monitoring and reporting clues, these companies are suspected of driving up prices and vowed to investigate and deal with illegal activities such as hoarding, price driving up, and collusion.
According to the statement, in response to prominent problems such as auto chip market hype and high prices, the State Administration of Market Supervision and Administration recently filed an investigation into auto chip dealers.
After the news, China’s CSI All Index Semiconductor and Semiconductor Equipment Index fell by about 6%. Chip developers Zhaoyi Innovation (Beijing) Co., Ltd., Wuxi NCE Power Co., Ltd. and Hangzhou Xiongshi Electronics Co., Ltd. dropped their limit by 10% in Shanghai on Tuesday. Some Asian chip stocks related to the auto industry outside of China also fell.
Disrupted supply chain
The global chip shortage that began in December last year has disrupted the global supply chain and hardware industry. Although initially concentrated in the automotive industry, it has spread to gadgets with a wide range of influences.
Concerns about supply uncertainty occasionally cause chip buyers and distributors to buy more chips than they need, creating a vicious circle that further pushes up prices.
As the global shortage shows little signs of easing, and the increase in sales of electric vehicles from China to Europe and the United States, investors have poured into the stocks of chip manufacturers. These companies have also largely escaped Beijing’s suppression of Internet companies to solve the industry’s “tricky problems”. This has had a devastating impact on large technology companies. Recently, China’s online education industry has also felt this.
Chinese automakers need to import about 90% of high-end chips, especially due to shortages. The China Association of Automobile Manufacturers stated that car sales in June fell 12.6% from the previous month, and officials pointed out that tight supply was the root cause.
As the global chip shortage persists, especially in the automotive industry, rising pricing has been a common theme discussed by semiconductor executives in this earnings season.
In June of this year, the CEO of American chip manufacturer Intel stated that he expects the shortage to bottom out at the end of the year, and the market will not return to normal until 2023.