21st Century Business Herald:

The latest data shows that the shortage of chips in the automobile industry has been eased. Has MIIT made assessments for the crunch situation this year? How will the automobile industry respond to this issue this year? What are the further plans for the chip industry?

Xin Guobin:

Thank you for your questions. Car chip has become a frequently discussed issue in our society since the outbreak of the COVID-19 pandemic. The MIIT has paid great attention to the work regarding chips, and researched with related sectors to address the issue. We set up a working group to expand and apply automotive semiconductors, and strengthened demand-supply links between car, components and chip enterprises; implemented measures in the circular to manage and facilitate services for enterprises, and promote substitute products' application; and coordinated with relevant departments to crack down on speculation and price pushing and other illegal activities, thus raising the supply capacity of chips and striving to maintain the smooth functioning of the automobile industry.

Through joint efforts, significant achievements have been made in car chip supply, with a favorable momentum emerging in monthly production and sales since the fourth quarter of last year. In 2021, 26.082 million and 26.275 million cars were produced and sold, with a year-on-year increase of 3.4% and 3.8%, respectively, ending a period of continuing reduction for three consecutive years, which was a hard-earned outcome. In January 2022, 2.422 million and 2.531 million cars were produced and sold, up 1.4% and 0.9% year-on-year, respectively. It's fair to say that the automobile industry has gotten off to a stable start this year.

Regarding the monitoring data of key car enterprises, there still exists certain chip shortages considering the demands and production plans of both car and components enterprises, although chip crunch is mitigating. Major chip enterprises worldwide have strengthened their production and supply of automotive-grade chips and will gradually release new production capacity this year. In addition, the domestic supply capacity of certain types of chip products are increasing. Therefore, chip supply's favorable momentum is expected to continue. 

Next, we will take a slew of measures to maintain the steady operation of the automobile industry, with the focus being as follows:

First, we will strengthen the demand-supply connections. We will create online link platforms for car chips based on our past efforts, provide information channels for chip production and supply, and improve the upstream and downstream cooperation mechanism of the industrial chain.

Second, we will intensify coordination efforts. We will guide car and components enterprises to improve their supply chain, make rational production plans, support each other, improve the efficiency of resource allocation, and minimize the impact of the chip crunch. Allocation efficiency is quite important. Some enterprises' products are sold fast, so the chip crunch will have a big impact on them, but some enterprises' products are not recognized by consumers, so even if they get chips, people won't buy their products, and this will result in a mismatch of resources in the industry.

Third, we will boost the capacity of chip supply. We will further support coordination and innovation among car, components and chip enterprises, so as to improve domestic chip production and supply capacity in a prudent and orderly manner. Presently, our application testing and assessment system is not sound, so we will make further efforts to remedy the deficiencies.

Fourth, we will advance international cooperation. As the automobile industry is a highly internationalized industry, we must carry out globalized development, stimulate transnational chip enterprises to increase supply to the Chinese market, intensify the distribution of domestic production capacity, and strengthen the resilience and stability of the industrial and supply chains.

Mr. Tian Yulong has just introduced the planning of the whole chip industry, and I will add some points regarding your questions.

The CPC Central Committee and the State Council issued the Measures on High-quality Development of Integrated Circuits and Software Industries in a New Era. Next, we will focus on implementing the policy. We will promote the free flow of production factors and resources, create a fair and just market environment, intensify intellectual property rights protection, and deepen international coordination, thus further improving the high-quality development of the industry. Thank you!