Like canaries in a coal mine, carmakers and suppliers in China are warning that a shortage of automotive microchips is threatening to slow down the global industry's pandemic recovery.
The alarm was sounded this month by Volkswagen and German suppliers Bosch and Continental, which cited tightening supplies of semiconductors and said bottlenecks could run into 2021.
The industry is beginning to brace for impact as microchip prices rise and inventories dwindle.
Li Shaohua, deputy secretary-general of the China Association of Automobile Manufacturers, said last week that auto production in China could take a "relatively big" hit in the first quarter of 2021 as a result.
Some automotive companies around the world are still recuperating from the hit they took when China's market crashed because of COVID-19 in the first quarter of 2020.
Still unknown is how bad the chip situation will be or whether the shortage might spread to other markets.
Automakers in China were the first to feel the pinch partly because the world's biggest auto market is recovering so rapidly from the pandemic — chipmakers simply can't keep up with its rebound. But as North America and Europe bounce back, they may also come under pressure.
"To be honest, everyone's at risk. It could be global," said one executive at a Western automotive player in Asia who didn't want to be named. "It's more than a minor headache, and it can't be fixed quickly."
It takes only one missing part, no matter how mundane, to halt production of a vehicle anywhere in the world. The internationally intertwined auto industry learned that the hard way following the 2011 earthquake-tsunami-nuclear meltdown disaster in Japan. Auto output from North America to Nagoya was hammered when a single microcontroller plant in Japan owned by Renesas was knocked offline.