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.

Read more

• [Insights] China’s Position in EV Battery Market to be Shaken as the Mass Production Race of All-Solid-State Battery Industry Speeds up?
• [News] South Korea Reportedly Develops AI Chips for Autonomous Vehicles, Challenging NVIDIA

(Photo credit: iStock)

The latest punitive tariffs imposed on Chinese-made electric vehicles (EVs) by the Biden administration are likely to discourage BYD, Leapmotor, and other local manufacturers from their global expansion plans, though the US is not their key target yet, according to a report by the South China Morning Post, citing Chen Jinzhu, CEO of consultancy Shanghai Mingliang Auto Service.

Citing Stephen Dyer, Greater China co-leader and head of the Asia automotive practice at global consultancy AlixPartners, the report stated that Chinese automakers are expected to go to Europe first, among other established and mature markets, as they monitor the evolving political landscape in the US.

President Biden announced new tariffs on Tuesday, targeting Chinese electric vehicles, semiconductors, batteries, solar cells, steel, and aluminum. The tariffs on Chinese EVs will increase to 100%, quadrupling the current rate of 25%, which takes effect in 2024.

As a result, some Chinese EV makers are expected to become more cautious about expanding overseas. In the meantime, these manufacturers are also preparing for potential challenges in Europe, where the European Commission began investigating Beijing’s subsidies for carmakers last year, according to South China Morning Post.

In October, 2023, the European Commission, responsible for trade policy in the 27-nation European Union, initiated an investigation to determine if fully electric cars manufactured in China were benefiting from distortive subsidies and thus merited additional tariffs.

The deadline for implementing provisional measures like tariffs or quotas is July 4, nine months after the Commission initiated its investigation, according to EU regulations.

In January, TrendForce has projected that the global sales volume of NEVs (including BEVs, PHEVs, and FCVs) is estimated to reach approximately 12.8 million units in 2023. Regional market sales shares are expected to be 60% in China, 22% in Western Europe, 11% in the United States, and 6% in other regions, with China’s market demand distinctly in the lead.

However, with China’s subsidies gradually phasing out and the increasing market penetration of NEVs in the country, the growth rate of China’s NEV market is starting to slow. This, coupled with the growing demand for electric vehicles in overseas markets, is prompting numerous Chinese automotive brands to expand internationally, particularly in Southeast Asia, where they are projected to hold a 67.5% market share in 2023.

(Photo credit: BYD)

As per a report from Reuters, US Commerce Secretary Raimondo stated on May 8th that the need for the government to take the threat posed by China-produced connected cars more seriously, suggesting potential “extreme action” to restrict or prohibit the import of such vehicles to prevent the leakage of data belonging to US citizens.

Regarding the national security risk investigation launched by Washington earlier this year into Chinese automobiles, Raimondo expressed concerns that Chinese connected vehicles could collect a vast amount of data about Americans, including who they are, what they say in their car, where they go to, as well as their patterns of driving.

Per Reuters, the US administration initiated a review in February this year on whether the import of Chinese automobiles poses a national security risk. Raimondo stated on May 8th that the Department of Commerce is reviewing the public’s comments on this review submitted before April 30th.

Read more

• [News] U.S. Imposes Further Sanctions, Revoking Intel and Qualcomm’s License to Supply Chips to Huawei
• [News] US Considers Sanctioning Huawei-Linked Chinese Chip Network, Huawei-Related Enterprises Blacklisted

(Photo credit: Pixabay)

According to sources cited in a report from Bloomberg, the US administration is expected to announce its decisions on tariffs for imported goods from China as early as next week. The tariff decision is anticipated to target key strategic industries, including electric cars, The tariff decision is anticipated to target key strategic industries, such as electric cars, and will reject the across-the-board hikes sought by previous policies.

Bloomberg further indicates that the latest tariff decision is the culmination of a review of the final outcome of the so-called Section 301 tariffs, which were initially implemented during the previous US administration starting in 2018.

The US government is now preparing to impose targeted new tariffs on key industries such as electric cars, batteries, and solar cells. The full decision statement is expected to largely maintain existing tariffs.

Two sources cited by the report stated that the US government plans to announce this tariff policy next Tuesday. The full details are currently unclear.

Regarding this matter, the White House has declined to comment.

Besides the rumored new tariffs, per an announcement of the US government, it indicated that the US government would triple the tariff rate on steel and aluminum imports from China. The US believes it is necessary to strengthen countermeasures against products overcapacity and non-market investments from the Chinese government.

The punitive tariff rate was previously at 15%. In 2020, during the administration of the previous government, it decreased to 7.5% after the US-China trade negotiations reached an agreement. If the rate triples, it will approach the highest level of punitive tariffs, nearly 25%.

Read more

• [News] US Government Considers Adding ChangXin Memory Technologies to Entity List, Imposing Further Sanctions on Chinese Firms
• [News] Bypassing U.S. Restrictions? CXMT Showcases GAA Technology for 3nm Chips
• DRAM Industry Sees Nearly 30% Revenue Growth in 4Q23 Due to Rising Prices and Volume, Says TrendForce

(Photo credit: iStock)