Automotive chip order times remain long around the world, but brokers are focusing on China, which has become ground zero for a crunch that the rest of the industry is gradually moving beyond.
In this March 24, 2021 file photo, mid-sized pickup trucks and full-size vans are seen in a parking lot outside a General Motors assembly plant where they are produced in Wentzville, Mo. From his small office in Singapore, Kelvin Pang is ready to wager a $23 million payday that the worst of the chip shortage is not over for automakers – at least in China.
Automotive chip order times remain long around the world, but brokers like Pang and thousands like him are focusing on China, which has become ground zero for a crunch that the rest of the industry is gradually moving beyond. Despite being the world's largest producer of cars, and leader in electric vehicles , China relies almost entirely on chips imported from Europe, the United States and Taiwan. Supply strains have been compounded by a zero-COVID lockdown in auto hub Shanghai that ended last month.
New orders via distributors are on hold for an average lead time of 49 weeks – deep into 2023, according to the analysis, which provides a snapshot of the global shortage though not a regional breakdown. Lead times range from 6 to 198 weeks. TrendForce analyst Galen Tseng told Reuters that if auto suppliers needed 100 PMIC chips - which regulate voltage from the battery to more than 100 applications in an average car - they were currently only getting around 80.The tight supply conditions in China contrast with the improved supply outlook for global automakers. Volkswagen, for example, said in late June it expected chip shortages to ease in the second half of the year.
The gray market carries risks because chips are sometimes recycled, improperly labeled, or stored in conditions that leave them damaged. "It's not like all the chips are somewhere hidden and you just need to bring them to the market," said Ondrej Burkacky, senior partner at McKinsey.
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