Salem Radio Network News Tuesday, September 28, 2021

Science

China regulator targets auto chip distributors with price-gouging probe

SHANGHAI (Reuters) -China’s regulatory agency is launching an investigation into chip distributors in the auto industry, it said on Tuesday, citing suspicions of price gouging.

The action by the State Administration for Market Regulation (SAMR) is the latest in a regulatory crackdown over the past year that has targeted a range of companies and industries as the Chinese government clamps down on industry.

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

The firms were suspected of driving up prices, based on price monitoring and reporting clues, it 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% 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% from the previous month, the China Association of Automobile Manufacturers has said, with officials pointing to supply constraints as the root cause.

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

(Reporting by Josh Horwitz; Editing by Tom Hogue and Clarence Fernandez)

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