(Yicai Global) Dec. 6 -- Global semiconductor chip supply tensions have now rippled into the auto industry. Chip supplies have indeed taken a hit, but the situation is not as serious as rumors hold, Volkswagen Group China said yesterday in response to claims its China units are to stop production. It is casting about for solutions and its two joint ventures are still in normal operation, the firm added.

German automaker VW’s SAIC Volkswagen JV was to cease production from Dec. 4, and SAIC Volkswagen from the start of this month, the reports claimed on Dec. 4.

The Covid-19 pandemic has affected the supply of some chips for global automotive electronic components, and the full recovery of the Chinese market has further spurred growth in demand, and this may disrupt China’s overall vehicle production, including VW’s, Volkswagen Group China said. Deliveries have not yet been affected, and the company has been coordinating with its headquarters and suppliers to take active countermeasures, VW said.

Tight chip supplies have directly impacted production of in-vehicle computers’ Electronic Stability Program and Electronic Control Unit, the main suppliers of which are German multinational automotive parts maker Continental and German global engineering and technology firm Bosch.

“The Covid-19 pandemic and the global economic crisis resulted from it have caused drastic fluctuations in the auto market,” Continental told Yicai Global on Dec. 5, adding, “The industry’s current recovery in China is far beyond what the market expected a few months ago.”

“Semiconductor manufacturers have begun to expand production capacity to cope with the sudden increase in supply demand, and the current supply shortage will improve within six to 9 months, considering the industry’s normal delivery time,” Continental said.

"There may be bottlenecks in the supply chain for certain parts, which has little impact on our group as a whole,” German automotive supply chain giant Bosch also told Yicai Global.

Editor: Ben Armour