- China has accelerated its efforts to increase self-sufficiency in cutting-edge chip manufacturing capabilities as US and EU export controls continue to deny China access to advanced semiconductor manufacturing equipment.
- That effort, however, also extends to less advanced chips, for example for applications in electric vehicles. China still imports around 90 percent of its automotive chips as Chinese producers struggle to replace leading US and EU companies in the Chinese market.
- Li Shaohua, Vice-President of China’s Association of Automotive Manufacturers (CAAM), argues that promoting localization of the chip supply chain is an important measure to ensure the healthy development of the automotive industry.
- Standards play a decisive role in promoting domestic substitution. A key hurdle for Chinese automotive chip vendors to break into the market is missing trust in the safety and reliability of their chips even by Chinese automotive OEMs. Since automotive chips need to face harsh external environments, they need to meet much higher standards than commercial chips, as outlined in further detail in the Digital Power China study „Reverse Dependencies.“
- To promote cooperation along the entire automotive chip value chain and create trust between chip vendors and auto OEMs, the Ministry of Industry and Information Technologies has set up the China Automotive Industry Innovation Alliance. The alliance’s objective, amongst others, is to achieve independence for China’s automotive industry and promote domestic substitutions.
- Membership of the alliance is made up of Chinese OEMs (e.g. SAIC, BYD, FAW), automotive electronics and software vendors (e.g. CETC, CATL, Weichai), chip companies (e.g. SMIC, Black Sesame, Horizon), and state-linked research institutions (e.g. CAICT). While the alliance claims to be open to all industry participants, the technical committee is made up purely of Chinese entities.
Sinolytics is a research-based business consultancy entirely focused on China. It advises European companies on their strategic orientation and specific business activities in the People’s Republic.