[News] China’s Automotive Chip Localization Ratio Reportedly to Hit 15% by Year-End amid U.S. Reliance

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Following the latest U.S. chip export curbs, which adds 140 Chinese entities to the restriction list, the China Association of Automobile Manufacturers (CAAM) has made its stance. According to CnEVPost, the association highlighted that U.S. automotive chips are no longer dependable or secure, urging Chinese companies to caution when sourcing US-made chips.

However, according to Chinese tech media ijiwei, U.S. giants have been dominating China’s automotive chip market, with influence far exceeding that of European, Japanese, and Korean rivals.

By the end of 2023, the localization rate of automotive chips in China has seen a significant increase, but it remains below 10%, according to ijiwei. In products like computing and control chips, as well as power and storage chips used in automobiles, China still relies on imports at rates of 99% and 92%, respectively, the report adds.

U.S. Chip Giants Dominate the Market

China, as the top vehicle production country globally, manufactured 30.16 million vehicles in 2023, marking a 12% year-on-year increase, according to China’s Xinhua News Agency. As per Xinhua, China’s auto exports reached a record high of 4.91 million vehicles in 2023 as well, posting a 57.9% year-on-year growth, thanks to the sharp increase in new energy vehicle (NEV) exports.

However, over a long time, the localization rate of automotive chips in China was below 5%, the ijiwei report notes. Major players from overseas, including Texas Instruments, Onsemi, ADI, and Microchip, dominate the market.

It is worth noting that a group of U.S. chip heavyweights have been advancing in the automotive sector, led by NVIDIA, Qualcomm, Wolfspeed, Intel as well as its subsidiary Mobileye, and AMD, the ijiwei report adds. These companies reportedly cover areas such as smart driving, smart cabins, and next-generation power devices.

2021: A Turning Point for China

It is not until the automotive chip shortage in 2021 that the turning point had arrived, and the importance of self-controllable automotive chip supply chains was highlighted in China, according to ijiwei.

A number of domestic MCU companies have been burgeoning since then, including Joulwatt, Beijing’s NavInfo, C*Core, GigaDevice, BYD Semiconductor, and others, as per ijiwei. According to analysts cited by ijiwei, the domestic production rate for vehicle-grade MCUs is now approaching 10%.

On the other hand, in the automotive CIS sector, China’s OmniVision is one of the leading players, second only to ON Semiconductor. As per ijiwei, in recent years, China’s Goke Microelectronics, Smartsens, and BYD Semiconductor have also been making progress in the segment.

Among all the products, the power device sector has seen the fastest progress in domestic production, noted ijiwei. BYD Semiconductor, Starpower, and Zhuzhou CRRC Times Electric are all actively promoting localization efforts.

Localization Rate Expected to Rise to 15%

A new round of U.S. policies is expected to speed up the domestically- manufacturing process. While the pace of localization is accelerating, industry forecasts cited by ijiwei project China’s domestic automotive chip localization rate would rise to 15% by the end of 2024.

According to previous plans from China’s Ministry of Industry and Information Technology cited by ijiwei, the localization rate of automotive chips in China is expected to reach 25% by 2025.

Chinese automakers may also be driving the change, as they are increasingly involved in the chip sector. According to ijiwei, companies such as BYD, Geely, Changan, Great Wall Motor, Xiaomi, SAIC, Dongfeng, FAW, NIO, Li Auto, and Xpeng are either directly involved in chip production or investing in the ecosystem to support chip manufacturing, all in efforts to build their own chip supply security.

However, some areas still require further development, with cockpit chips being considered one of the most challenging fields for China, according to ijiwei.

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(Photo credit: BYD)