China targets auto chip dealers with global supply

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China’s top market watchdog said it is investigating auto chip dealers who it suspects are driving prices up amid global chip scarcity.

On Tuesday, the state market regulator said it would tighten market controls and crack down on illegal practices such as hoarding, price gouging and collusion. The regulator did not name any companies that were being investigated.

In recent months, automobile manufacturers have been among the first and hardest hit by the ongoing chip shortage. The rising demand for semiconductors in many regions after the end of the Covid-19 lockdowns coincided with widespread disruption to chip manufacturing. As a result, Ford Motor Co., General Motors Co. and Volkswagen AG, among others, shut down some production lines.

While China’s auto market suffered less damage, representatives of the country’s auto industry recently blamed the shortage of semiconductors for the decline in sales. In June, China’s auto sales ended an eleven-month growth period, down 5.1% year over year. Semiconductors are essential to power various electronic systems in automobiles.

The global race for chips in the automotive sector and beyond has led to price increases and a booming business for the middlemen who sell electronic components. It has also created an ideal environment for fraud and malicious actors, according to a wide variety of experts, including industry groups, chip brokers, and counterfeit researchers.

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