China-Makers of cars and electronic devices from TVs to smartphones are sounding alarm bells about a global shortage of chips, which is causing manufacturing delays as consumer demand bounces back from the coronavirus crisis.

The problem has several causes, industry executives and analysts say, including bulk-buying by U.S. sanctions-hit Chinese tech giant Huawei Technologies, a fire at a chip plant in Japan, coronavirus lockdowns in Southeast Asia, and a strike in France.

More fundamentally, however, there has been under-investment in 8-inch chip manufacturing plants owned mostly by Asian firms, which means they have struggled to ramp up production as demand for 5G phones, laptops and cars picked up faster than expected.

A source at a Japanese electronics component supplier said it was seeing shortages of WiFi and Bluetooth chips and was expecting delays of more than 10 weeks.

The automotive industry in China, which flagged the issue earlier this month, is anticipating production at some Chinese carmakers to be affected in the first quarter of next year, according to a senior industry association official.

Surging Demand

Apple, a major Qualcomm customer said recently that sales of some new high-end iPhones were hemmed in by a shortage of components.The current crisis stems from several factors that converged last year. Like most every chip designer on the planet, Qualcomm outsources production to Asian companies, foremost among which are TSMC and Samsung Electronics Co. The pair are increasingly the only recourse for producing the most advanced semiconductors. But their capacity takes years to plan and billions of dollars to build in tandem with customers, and the post-Covid 5G phone and internet boom took their clients by surprise.

All that has dried up the spigot for smaller-volume buyers such as the makers of cars and gaming consoles: Nintendo Co., Sony and Microsoft Corp. have struggled to make enough Switches, PlayStations and Xboxes for about a year. The game hardware industry is bracing for supply to get worse before it gets better in 2021, potentially even affecting the next holiday season, people familiar with the matter say.

Consumer demand in China, especially for cars , has snapped back unexpectedly quickly from the coronavirus crisis, and orders for products such as laptops and mobile phones in regions still struggling with pandemic restrictions, such as Europe and the United States, have also picked up.

Other short-term triggers for the chip shortage include stockpiling by telecoms giant Huawei ahead of mid-September when its suppliers had to comply with U.S. sanctions.

This was aggravated by Huawei's rivals such as Xiaomi seeking to gain market share by stepping up orders of components.

Full Capacity

The surge in demand has meant 8-inch plants, which tend to make older, less sophisticated chips, are under strain.

A GlobalFoundries spokesman said demand was growing across the board and was accelerated by the coronavirus pandemic.An official at South Korean foundry firm DB Hitek, which makes chips for the likes of Apple to use in its tablets, said its 8-inch plants were running at full capacity at least for the next six months, with tight supply anticipated until the second half of next year.

The United States has also curbed the ability of China's top chipmaker, SMIC, to get U.S.-made equipment and raw materials, exacerbating the supply crunch. SMIC did not respond to a request for comment.