With the rising penetration of new energy vehicles (NEV) in China, China-based automakers, such as BYD, SAIC, Nio, and Li Auto, are developing automotive chips to strengthen resilience and reduce reliance on other suppliers.
SAIC recently said it would invest CNY6 billion (US$830 million) to form a joint venture with partners, with SAIC holding a 99.8% stake in the JV, to engage in developing automotive chips and accelerate import substitution.
Following efforts for automotive chip localization, including setting up funds, investing in IC design houses, and forming JVs with partners, SAIC targets to bring the proportion of locally-sourced chips to 10% in 2023, up from 7% in 2022, and plans to reach 30% by 2025. SAIC has also set a target to complete the vehicle validation of 100 domestically produced chips by the end of 2023.
In addition to SAIC, other companies such as BYD, Geely, NIO, and Li Auto are joining the bandwagon to develop their automotive chips in various ways, including investments.
In March, SiEngine, co-funded by Geely's subsidiary ECARX and Arm China, completed its third round of financing within a year. Automakers have introduced SiEngine's first chip, made on TSMC's 7nm node. The company is developing its next-generation chip for smart cockpit, autonomous driving, and CPU for vehicles.
Zhejiang Jingnen Microelectronics, another startup incubated by Geely, completed its second round of financing in June. In March, the startup announced the successful tape-out of its first auto-grade IGBT chip and plans to introduce its product into several cars in 2023.
As competition intensifies in the Chinese new energy vehicle market, major automakers are increasing their investments in automotive chips to ensure supply security. Still, due to the high requirement for technology and capital for auto-grade MCU and analog chips, the local sourcing rate is relatively low in China.
Sources indicated that except for a few automaker giants, like Tesla, which can set up separate businesses for designing chips, most carmakers would have to acquire IC design capability either through investments or joint ventures. Besides, automakers also face challenges such as prolonged timelines for investment returns, chip standardization, economies of scale, and cost issues.
