Chinese smart vehicle manufacturers are grappling with rising costs and supply shortages of critical components amid increasing demand driven by the global artificial intelligence (AI) expansion. The shortages primarily affect printed circuit boards (PCBs) and multilayer ceramic capacitors (MLCCs), both essential for equipping vehicles with advanced intelligence and autonomous capabilities.
Industry experts and analysts estimate that it will take at least a year before the global supply chain can adequately increase production of these parts to meet the growing needs of automakers. Chen Jinzhu, CEO of Shanghai Mingliang Auto Service, noted the importance of these small components in making millions of cars smarter despite declining demand for electric vehicles in some markets.
The global automotive sector currently faces a 20 to 30 percent shortage in components, with prices for key parts having more than tripled over the past year. This escalation is largely attributed to a surge in AI development and the rapid expansion of data centers worldwide, which consume large quantities of PCBs and MLCCs. These components are not only crucial for smart vehicles but also for mobile devices and other digital electronics.
According to data from the India Printed Circuit Association, the cost of PCBs has surged to approximately 330 yuan (around HK$385) per sheet, marking more than a threefold increase in the last 12 months. MLCCs, which stabilize electrical currents in various electronic devices, have seen prices climb from 10 yuan to 40 yuan per 1,000 units earlier this year amid severe supply shortages caused by demand from AI-driven applications.
Dai Yong, chief financial officer of Geely Auto, stated that while the increased prices of PCBs and MLCCs have minimal impact on the company’s overall earnings due to their relatively small cost share, a shortage of these components disrupts production lines and assembly processes. He emphasized that memory chips pose a more significant cost burden, squeezing profit margins for carmakers, particularly as these chips are essential for autonomous driving functionalities.
The competition for sophisticated memory chips has intensified, with manufacturers often prioritizing high-tech AI industries over automotive clients. Qian Kang, owner of a vehicle circuit board factory in Zhejiang province, explained that the higher added value and sophistication of AI memory chips mean they are generally allocated to technology sectors rather than electric vehicle production.
To maintain production schedules, automakers have been paying premium prices for these critical parts. William Li, CEO of Nio, reported that rising raw material costs, especially for memory chips, have increased the production cost of each vehicle by around 20,000 yuan. He acknowledged the significant pressure on carmakers to remain financially viable amid these challenges.
Technology firms like Ecarx, which develops hardware and software solutions for digital cockpits and preliminary autonomous driving systems, highlight the importance of innovation and strategic partnerships to mitigate supply risks. Lily Cai, executive vice-president of Ecarx, emphasized that close collaboration with key suppliers and early investment in product development have helped the company secure adequate supplies and maintain a competitive edge.
In the latter half of 2025, Ecarx signed agreements with PCB manufacturer Victory Giant Technology, semiconductor company Monolithic Power Systems, and Samsung to create advanced AI-powered computing platforms for smart vehicles.
Despite a decline in overall vehicle sales in China—including a 21 percent year-on-year drop to 1.46 million units in July, encompassing both petrol and electric vehicles—analysts warn that efforts to produce smarter vehicles could further strain component supplies in the near term.