China Auto Billionaire’s Geely Sees No End To Chip Shortage That Cut ’21 Profit

Geely Automobile Holdings, the China automaker controlled by billionaire Li Shufu, said today there’s no end in sight to chip shortages and other problems that contributed to a drop in profit in 2021.

“The intensified competition in China, the rise in raw material prices, other pandemic-related disruptions and global shortage of chip supply have showed no sign of subsiding and should continue to put pressure on the sales performance and profitability of the group in 2022,” Geely said in its 2021 earnings report today.

“Our group’s financial performance in 2021 was below the management’s original expectations primarily due to the global shortage of chip supply during the year,” it noted.

Revenue increased by 10% to 101.6 billion yuan, or $16 billion, for the year ended Dec. 31; net profit dropped by 22% to 4.4 billion yuan.

Geely Auto is controlled by Li’s main holding company, Zhejiang Geely Holding Group, which in turn controls global brands including Volvo and Polestar; it also holds a stake in Daimler of Germany.

China is the world’s largest auto maker, and Li – also known as Eric Li — is the country’s richest auto industry entrepreneur with a fortune worth $25 billion on the Forbes Billionaire List today. The company’s Hong Kong-traded shares have lost 46% of their value in the past year.

Geely Auto will work to increase the number of new energy vehicles in its product mix, today’s report said. (See link here.) The company faces bruising competition, however, from Tesla and a pack of Chinese incumbents and upstarts such as XPeng, and Warren Buffett-backed BYD. Beijing-headquartered Xiaomi, the world’s No. 3 smartphone maker, yesterday reaffirmed its intent to enter the auto maker in 2024. (See related post here.)

China is home to the world’s second-largest number of billionaires after the United States.

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