The action is being taken by the State Administration for Market Regulation (SAMR) is one of a number of crackdowns on the technology sector in China.

“In response to prominent problems such as speculation and high prices in the automotive chip market, the State Administration of Market Supervision has recently filed an investigation on car chip distributors,” Reuters reported the agency as saying.

The SAMR said price monitoring had revealed rising prices and that illegal acts such as hoarding, exorbitant pricing and the formation of cartels would be investigated and punished.

Shortages of chips started in the automotive sector towards the end of 2020 but have since migrated to many other areas of consumer electronics. Because customers are often put on allocation to receive a fraction of their orders during times of shortage there is often a tendency for customers to over-order and hoard excess stock.

Car sales in China fell 12.6 percent in June from the previous month due to constrained vehicle production in turn due to chip supply constraints.

Related links and articles:

Strengthening the global supply chain in an uncertain era

Intel could make automotive chips to ease shortfall, says CEO

Volkswagen may claim damages over chip shortages

Report: Chipmakers raising prices 10 to 20 percent

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