The supply shortage is caused by inadequate global investment into chip manufacturing, rising demand for chips from electronic devices, and production slowdowns in Europe and Southeast Asia due to the second wave of the COVID-19 pandemic.

German auto suppliers Continental, Bosch and Volkswagen, the world’s largest carmaker, warned last week that a global shortage of semiconductor components could impact production in China, which has seen demand sharply rebound after bringing the COVID-19 pandemic largely under control.

Li Shaohua, deputy secretary general at the China Association of Automobile Manufacturers (CAAM), told its official publication AutoReview that according to their investigation, production at some companies will have “relatively big impact” in the first three months of 2021.

But CAAM does not expect the chip supply shortage to have that too large an impact on the industry’s whole year output, he said, without elaborating further on the impact on volumes or financials.

Li said that  as companies in the supply chain are adding inventories of key chips and related materials and capacity of chip-making is still not enough, it was inevitable that chips price will increase.