Chip shortage intensifies in German industry, says Ifo

BERLIN (Reuters) -Shortages of materials for German manufacturers of electronic and optical products became more acute in October, driven by a tightening of global controls on rare earth components, the Ifo economic institute said on Wednesday. Rare earths, essential for producing semiconductors, sensors and other advanced components, have become increasingly subject to trade restrictions, particularly from China, which dominates global supply. Some 10.4% of companies in the sector in Germany reported supply bottlenecks in October, up from 7.0% in July and 3.8% in April, said the institute. "The control mechanisms and trade restrictions for rare earths are taking their toll," said Klaus Wohlrabe, head of Ifo surveys. "If this trend continues and worsens it will also have a negative impact on economic growth." In manufacturing as a whole, only 5.5% of companies reported supply problems, said Ifo. Germany's industry has faced severe supply chain disruptions and European policymakers are trying to reduce dependence on critical raw materials by diversifying supply chains and boosting domestic production of rare earths but this takes time. (Writing by Madeline Chambers, editing by Kirsti Knolle)

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