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China tightens distributor cap after local outfits hoard automotive silicon then charge silly prices

State Administration of Market Supervision warns it's going after collusion to cash in on shortages

Chinese antitrust watchdog, State Administration of Market Supervision (SAMR), announced Tuesday it has started investigating price gouging in the automotive chip market.

The regulatory body promised to strengthen supervision and punish illegal acts such as hoarding, price hikes and collusive price increases. SAMR singled out distributors as the object of its ire.

In the early stages of the COVID-19 pandemic, prices for items such as hand sanitizer, face masks, toilet paper and other health-related items saw startling inflation that required legal intervention.

As the pandemic wore on and work from home kit became a necessity, the world saw a new kind of shortages: semiconductors.

The automotive industry was hit particularly hard by the shortage, largely because its procurement practices sent it to the back of the queue. The industry has since endured factory shutdowns and reduced levels of vehicle production – which, given cars have long supply chains, is not the sort of thing anyone needs during difficult economic times.

Chinese entrepreneurs are clearly alive to the opportunities the silicon shortage presents. Last month several Chinese would-be bootleggers were caught smuggling the critical tech with tactics like taping US$123,000 worth of product to their calves and torso or hiding them in their vehicle as they attempted to cross borders.

Analyst firm Gartner has predicted semiconductor shortages will remain moderate to severe for the rest of 2021 and continue until the second quarter of 2022. Taiwanese chipmaker TSMC has said shortages will continue until 2023.

The Register imagines that those that can influence chip prices in China, and elsewhere, will continue to try their luck until demand deflates. Or until SAMR gets a grip on regulation, whichever comes first. ®

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