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August 4, 2021

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Distributors of auto chips face pricing probe

China’s regulatory agency is launching an investigation into chip distributors in the auto industry, it said yesterday, citing suspicions of price gouging.

The action by the State Administration for Market Regulation is the latest in a regulatory tightening over the past year.

“In response to prominent problems such as speculation and high prices in the automotive chip market, the State Administration of Market Supervision has recently launched an investigation on car chip distributors,” it said.

The firms were suspected of driving up prices, based on price monitoring and reporting clues, the agency added in its statement, and vowed to investigate and punish illegal acts such as hoarding, price-gouging and collusion.

China’s CSI All Shares Semiconductor & Semiconductor Equipment Index fell by roughly 6 percent after the news.

A global shortage of chips that began last December has disrupted supply chains and the hardware sector worldwide. Though initially concentrated in the automotive sector, it has since spread to affect a wide range of gadgets.

Concerns about supply uncertainty have occasionally led chip buyers and distributors to purchase more chips than they need, creating a vicious cycle that further drives up prices.

The shortage has hit China’s auto industry in particular. June car sales fell 12.6 percent from May, the China Association of Automobile Manufacturers has said, with officials pointing to supply constraints as the root cause.

In June, chief executive of US chipmaker Intel said he expected the shortage to hit bottom by the year-end, with the market returning to normal only by 2023.


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