[News] China Reportedly Demands Automakers Increase Local Chip Procurement to 25%

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To strengthen its semiconductor supply chain, the Chinese government is reportedly requiring domestic automakers, including BYD, to expand their procurement of locally-produced chips. The goal is to increase the proportion of domestically-sourced automotive chips to 25% by 2025.

According to a report from Nikkei on May 16th, the Chinese government has instructed major local automakers to increase the proportion of domestically-produced automotive chips they procure to 25% by 2025 from 10% currently. The Chinese authorities hope that by raising the procurement ratio of Chinese-made chips, they can accelerate the pace of independence for the country’s semiconductor supply chain.

As per the same report, the Chinese Ministry of Industry and Information Technology (MIIT), which is responsible for national automotive industry policy, has asked major Chinese automakers to increase the local procurement ratio of automotive chips to 20-25%. This request targets not only the major electric vehicle manufacturer BYD but also SAIC Motor, Dongfeng Motor, GAC Motor, and FAW Group.

However, this requirement is not mandatory; instead, it encourages automakers to expand their procurement of local chips through incentives. An industry source cited by the same report revealed that ultimately, the goal is for all automotive chips to be locally sourced.

The report further indicates that though the conflict between China and the U.S. in the semiconductor sector continues to intensify, manufacturing technologies used for automotive chips are usually not the most advanced, and therefore not subject to U.S. export controls.

This means that Chinese semiconductor manufacturers will be able to procure manufacturing equipment from overseas, bolstering their automotive chip businesses.

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