Chinese regulator targets auto chip distributors with predatory pricing investigation

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

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

“In response to significant issues such as speculation and high prices in the automotive chip market, the State Market Surveillance Administration recently filed an investigation into automotive chip distributors,” the agency said. .

The companies were suspected of driving up prices, based on price monitoring and reporting of clues, she added in her statement, and pledged to investigate and punish the acts illegal acts such as hoarding, price hikes and collusion.

China’s CSI All Shares Semiconductor & Semiconductor Equipment index fell about 6% after the news.

A global chip shortage that began last December has disrupted supply chains and the hardware industry around the world. Although initially concentrated in the automotive sector, it has since spread to a wide range of gadgets.

Concerns about the uncertainty of supply have sometimes led chip buyers and distributors to purchase more chips than they need, creating a vicious cycle that drives prices even higher.

The shortage has particularly affected the Chinese auto industry. Car sales in June fell 12.6% from the previous month, the China Association of Automobile Manufacturers said, with officials pointing to supply constraints as the root cause.

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

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

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