Nio was up over 2% in premarket trading

(July 20) NIO Inc. was up over 2% in premarket trading. Days ago Nio subsidiary buys stake in chipmaker amid crippling global semiconductor shortage.

A subsidiary of Chinese electric vehicle maker Nio Inc. has acquired a small stake in a unit of Shanghai-listed AI chip company Cambricon, cnEVpostreportedSunday.

What Happened: The move comes after Cambricon said Friday it has agreed to increase the registered capital of its wholly-owned subsidiary Cambricon Xingge by 170 million yuan ($26 million) and bring in investors, as per the report.

Nio’s subsidiary Weiran (Jiangsu) Investment Co. Ltd. acquired a 2% stake in Xingge for RMB 4 million ($630,000).

Weiran is wholly owned by XPT, NIO's motor business subsidiary, the report noted.

Why It Matters: Nio’s acquisition of a stake in a chip company comes amid thecrippling global chip shortagethat has disrupted manufacturing across sectors and even forced global automakers to halt production.

More industry voices are now indicating the shortages could spill over to next year and requires investment. In April,Intel Corp.INTCCEO Pat Gelsingerwarnedthat the global semiconductor chip supply shortage could stretch two more years.

It wasreportedin October last year that Nio is planning to embark on in-house R&D to develop computing chips for autonomous driving and has set up a separate hardware team, internally named Smart HW, for that purpose.

Price Action: Nio’s shares closed more than 1% higher in Monday’s trading at $43.35.

Other EV stocks rally continue in premarket trading.

Tesla-Tesla Motors. saw registrations of its Chinese-made cars climb again last month as promotions toward the quarter-end helped offset a string of negative press around customer complaints and quality concerns.

Registrations of Model 3 sedans and Model Y sports utility vehicles made at Tesla’s Shanghai factory totaled 28,508 units in June, a 29% increase from May and more than double the figure in April, data from China Automotive Information Net show. Model 3 registrations rebounded to 16,995, while Model Y’s hit 11,513, a 10% drop from May.