China urges chipmakers to allocate more capacity to China auto market

BEIJING (Reuters) - China’s industry ministry said on Tuesday it met with automotive and chip companies and asked them to help ease a supply shortage which has forced many automakers across the world to halt production.

The Ministry of Industry and Information Technology urged companies to “place high importance on” and “increase production capacity allocation” for China’s auto market, the world’s biggest, according to a statement on its website.

It did not name which companies attended the meeting.

The ministry also asked the firms to improve logistics efficiency and supply chain coordination to support the industry’s development, according to the statement.

An acute shortage of chips since the end of last year, which in some cases has been exacerbated by the former U.S. administration’s sanctions on Chinese chip factories, has hit the automotive sector particularly hard.

Automakers from General Motors to Stellantis and Honda Motor are shutting assembly lines due to the shortages, while some firms have also furloughed staff.

Asian chipmakers are rushing to expand their production capacity to appease the global shortage, but firms warn it may take months to plug the supply gap as they struggle to keep up with strong demand.

Reporting by Yilei Sun and Brenda Goh; Editing by Ana Nicolaci da Costa