The Chinese auto industry provides itself with less than 10% locally developed chips

Government statistics show that the Chinese auto industry has less than 10% domestic semiconductor components and remains heavily dependent on imports. According to some estimates, the degree of this dependence reaches even 95%, which is not very good for the world’s largest car market.

Image source: BYD

Representatives of the Development Research Center, whose statements last year are cited by the South China Morning Post, emphasize that in the field of control electronics and computing facilities in transport, Chinese industry is able to provide for itself at less than 1%, and in power electronics and memory chips, sovereignty is estimated at 8 %. Last spring, the political leadership of the PRC set a goal for Chinese automakers to increase the share of locally produced semiconductor components to 25% by the end of the coming year.

Production volumes of electric vehicles in China are growing rapidly, further increasing the need for semiconductor components. If traditional cars with internal combustion engines require from 600 to 700 chips for each car, then in the case of an electric car this number increases to 1,600 pieces. The presence of functions such as autopilot increases the figure to 3000 chips. According to the results of the first 11 months of last year, 11.49 million electric vehicles were produced in China, which is 37.5% more than the same period in 2023. Electric vehicles accounted for 40.8% of all passenger cars produced in China.

The share of chips in the cost of a car is also increasing. If in 2019 they claimed only 4% of the cost of the car, then by 2030 the share could grow to 20%. Moreover, even automotive chips produced in China are predominantly produced by foreign companies Infineon, NXP, STMicroelectronics, Texas Instruments and Renesas Electronics. If we talk about advanced electronics that are involved in driving a vehicle, the share of foreign manufacturers in the Chinese market is even higher. From January to September last year, Nvidia Orin X and Tesla FSD processors occupied 37.8 and 26.7%, respectively. American Qualcomm almost completely dominates the segment of chips for on-board infotainment systems. Chinese authorities in early December warned local automakers against excessive dependence on American-origin chips.

At the same time, Chinese chip manufacturers can offer alternatives mainly in the field of analog solutions, power electronics and some types of sensors. It is problematic to organize the production of advanced electronics under sanctions. At the same time, Nio and XPeng announced the completion of the development of their own processors for autopilot. In the future, it would be useful for the market to see some common solutions for the entire Chinese industry, since unification and large production volumes would reduce the costs of producing and purchasing these components.

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