© Reuters. FILE PHOTO: A researcher plants a semiconductor on an interface board during a research work to design and develop a semiconductor product at Tsinghua Unigroup research centre in Beijing, China, February 29, 2016. REUTERS/Kim Kyung-Hoon/File Photo

(Reuters) -British parts supplier Melrose’s automotive clients are cancelling orders at 25 times the rate seen earlier this year, it said on Tuesday, as the auto industry remains engulfed in a global chip shortage caused by the pandemic.

The owner of GKN (LON:), which supplies parts to carmakers such as Volkswagen (DE:), said the “in-month” cancellation from automotive customers has risen to about 20% to 25% from a normal 1% rate seen during the January-March period.

“Tightened supply of semiconductors to the automotive industry are frustrating and difficult to plan for, but whilst they affect current trading, they don’t impact long-term value, particularly as cash is well controlled and debt reduced,” Chief Executive Simon Peckham said.

The company said it was focussed on recovering costs in the backdrop of rising inflation and that all its businesses would take “whatever actions are necessary to do so”.

Melrose, however, said its aerospace division had shown improvement, with revenue in the third-quarter rising 16%.

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