Global buying frenzy in chips causing prices to skyrocket: report

Published (HKT): 2021.04.23 05:45
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A semiconductor buying frenzy started by Chinese buyers has propelled prices to 20 times higher than normal, as a global shortage of chips worsens amid lingering geopolitical tension and a pandemic that has disrupted supply chains.

Chinese smartphone manufacturer Huawei is among those piling up their stock as executives fear a United States crackdown on exports of top-level technology to China, initiated by former U.S. president Donald Trump, could lead to unstable supplies in the foreseeable future, according to Chinese media.

The reserves being built up by many firms were enough to last six months or longer, Huawei’s rotating chairperson Xu Zhijun said. He was commenting on the situation last week, mainland-based financial news platform Yicai reported.

Such panic buying has created ripple effects across other sectors where companies are willing to place higher bids for the core components to avoid being bogged down by a potential shortage later on.

The shortage of chips is wreaking havoc on an international level, affecting key industries from auto manufacturing to the production of laptops and other electronic products. The global automobile industry, for example, is set to lose two million cars in output by the end of 2021 due to the shortage, potentially causing pay cuts and layoffs, AutoForecast Solutions has said.

A recent example was when Chinese electric vehicle manufacturer Nio shut its factory down for five days due to the global shortage of semiconductors.

As Chinese firms snap up chips from around the world, semiconductor imports reached a record high in March. Some 58.9 billion semiconductors were brought into the country, amounting to US$35.9 billion, the General Administration of China said.

Prices for certain special microcontroller units had risen six times from US$8 to US$50, while others had shot up by 20 times, Yicai quoted an industry insider as saying.

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