Chip price cuts won't reduce NEV price in short term: insiders

Since the beginning of this year, the market price of consumer electronics control chips has continued to decline from three to double digits. But insiders believe it will not trigger a wide-ranging price reduction for new energy vehicles (NEVs).

Data shows that the prices of most consumer electronics chips, especially panel chips, communication chips, and analog chips have fallen by more than 20 percent in the past two months, some having dropped by over 80 percent.

CCTV reported on Monday that a core component chip has dropped from 3,500 yuan($516.4) last year to 600 yuan ($88.4), a fall exceeding 80percent.

Many consumers are concerned about whether the price reduction of chips would affect the prices of consumer electronics like smartphones and NEVs.

Experts said that the prices of these commodities would not be affected in the short term, but that there will be a downward trend in prices in the long run.

"The previous vehicle price increase was not entirely due to a chip price rise, as the price of bulk materials, including nickel, steel, aluminum and others have risen," said Yuan Chengyin, secretary general of China Automotive Chip Industry Innovation Strategic Alliance.

As the chip is a critical component of mobile phones, its price reduction will reduce the cost of the product, insiders believe.

However, phone price drops may not be immediate, but could occur after half a year, as manufacturers often place orders from chip suppliers at least one quarter in advance and set prices for the newly released version dependent on the cost.

Feng Kaili, an analyst of Zhuanzhuan Group, said that the factors affecting the price of mobile phones are more complicated. In addition to hardware costs, factors like chips, market supply and demand are also key elements.