EV sector may face new chip shortage
FTI highlights China's restrictions on rare earth minerals
Blog post: July 15th, 2023, 7:03 AM
The Federation of Thai Industries (FTI) suggests that electric vehicle (EV) makers could face a potential scarcity of chips due to China's latest action in limiting the exportation of two metals. This move comes as a consequence of the ongoing trade conflict between the United States and China.
Media reports suggest that Beijing's recent announcement regarding trade restrictions on certain gallium and germanium products, specifically those utilized in the chip and EV industries, is likely to cause disruptions in global supply chains. This move is anticipated to further escalate the ongoing trade war with Washington.
The limitation enforced by Chinese authorities is stated to be in order to safeguard national security; nevertheless, experts perceive it as a reaction towards the US purported efforts to hinder China's progress in technology.
In March, the shortage of chips in Thailand improved, bringing much-needed relief to car manufacturers who rely on semiconductors for their production.
Kriengkrai Thiennukul, the head of the FTI, expressed that the FTI is diligently observing the consequences brought about by the limitations on rare earth materials. This is particularly crucial for various sectors like electric vehicles and electronics as they are highly concerned about the possibility of a scarcity in microchips.
According to him, the chip manufacturing sector and supply chains reliant on semiconductors could potentially be influenced by various factors like the ongoing trade dispute between the United States and China, as well as geopolitical tensions including the strained relationship between China and Taiwan.
Before, car and computer makers faced a shortage of chips due to strict lockdowns in China aimed at controlling the spread of Covid-19 and the repercussions of the Russia-Ukraine conflict.
As a result of this issue, automobile manufacturers in Thailand had no choice but to postpone the shipment of certain car models to their customers.
According to Mr. Kriengkrai, both metallic elements are utilized in the electric vehicle (EV) sector. Numerous businesses are presently amassing these primary resources, with some already possessing enough reserves to sustain them for a period of approximately 2 to 3 months.
A shortage of chips might also lead to Thailand's car production failing to achieve its goal for the current year.
The Automotive Industry Club of FTI has established a goal for car production in 2023, which includes electric vehicles. They aim to manufacture a total of 1.95 million cars, out of which 1.05 million units will be destined for international markets.
The Thai government is actively endorsing electric vehicles (EVs) as one of the key industries to focus on, and there has been an increase in investments in projects related to EVs.
From January to June of this year, a total of 891 new project applications were presented to the Board of Investment for consideration. Out of these, an impressive 464 applications were concentrated on specific industries, such as electronics, food processing, and automotives, with a noteworthy emphasis on the EV supply chain. This data was revealed by the board itself.
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