China's Ministry of Industry and Information Technology Issues a Guidebook to Help Automakers Source Chips Amid Global Shortages

author: FutureCar Staff    

The recent chip and semiconductor shortage affecting the auto industry has forced car makers around the world to temporarily close factories or scale back production. The chips and semiconductor components are vital for today's modern vehicles, which can be equipped with dozens of individual electronic control units (ECUs).

In China, which is the world's largest auto market, vehicle manufacturers are getting some assistance from the government amid the ongoing chip shortages.

At at a seminar last week, China's Ministry of Industry and Information Technology (MIIT) issued a handbook to automakers that includes a list of common automotive semiconductors and their demand to ensure better management of the automotive chip supply, news outlet Gasgoo reported.

The manual includes 568 products from 59 semiconductor companies for major vehicle chips, covering a total of 10 categories, including computing chips, control chips and power chips. The manual lists of over 1,000 items that are in high demand by Chinese automakers, China Central Television (CCTV) said.

With the new guide, the MIIT aims to better facilitate the communication between automakers and chip suppliers. 

The ministry's handbook is designed to serve as a bridge for China's automakers and semiconductor companies to help both sides to "innovate and develop together," CCTV said, citing Sun Fengchun, a researcher at the Chinese Academy of Engineering.

A special meeting was held on Friday by the ministry to help automakers better identify sources of chip suppliers, the South China Morning Post reported.

Qiao Yueshan, Director of the Electronic Information Department of the Ministry, said at the meeting that as more and more vehicles are electrified, connected and intelligent, semiconductors will be much more important than they are now for automakers.

Demands for computer chips, power and memory chips have been surging in China, especially for the country's automakers that are building vehicles with more advanced features, such as advanced driver assist systems (ADAS) and autonomous driving capability.

According to Gasgoo, the timeline for upgrading the chips used in vehicle production was shortened from two years to just six months.

Chinese automakers import roughly 90% of chips used in vehicles and the country's automakers build one out of every three cars worldwide. The bulk of the chips are manufactured in Taiwan.

In late January, Contract manufacturer Taiwan Semiconductor Manufacturing Co Ltd (TSMC) said it will prioritize production of auto chips. TSMC is the world's largest contract manufacturer of chips. In addition to supplying the auto industry, TSMC also makes chips for computer giant Apple Inc. 

Vehicle output fell 15.9% in January to 2.4 million units from a month earlier, according to the China Association of Automobile Manufacturers. However its not clear if the chips shortages alone are responsible for the slowdown.

In addition to the published manual, the MIIT will provide active guidance and support for the development of the automotive semiconductor segment and the improvement in supply capacity of integrated circuits. 

The platform for the segment will strengthen the supply chain construction, improve the efficiency of distribution, and provide strong support for the steady and sound development of the industry, the MIIT said.

Tian Yulong, chief engineer of the ministry, said at a press conference on Monday that the chip industry faces opportunities and challenges at the same time, so it is necessary to form a global partnership to establish a chip supply chain and maintain its sustainable development, Gasgoo reported. 

Yulong said the Chinese government will provide strong support. 

China's Ministry of Industry and Information Technology was established in 2008 as a department under the State Council responsible for the administration of China's industrial branches and information industry.

The main responsibilities of the ministry are to determine China's industrial planning, policies and standards, monitor the daily operation of industrial branches, and promote the development of major technological equipment and innovation in the industrial sector.

U.S. automakers, including Ford Motor Co, General Motors and Tesla are also experiencing chip shortages and were forced to curb production due to the recent shortages.

The shortages are being blamed on the global pandemic, which led to declining auto sales and production output from suppliers beginning in the second quarter of 2020. It also caused automakers to curtail orders for semiconductors and chips used in vehicle production and increase production of chips for electronic devices such as laptops, which sales of had spiked as more people were forced to work remotely.

But as auto sales rebounded better than expected in the latter part of 2020 vehicle automakers ramped up production and increased their chip orders, which led to widespread shortages for automakers in China, the U.S., Japan and Europe.

Analysts are calling the recent chip shortages "extreme" and predict that the supply chains won't stabilize until spring at the earliest.

FutureCar Staff