Chinese carmakers’ hunger for chips boosts national self-reliance drive

{"text":[[{"start":12.9,"text":"Chinese carmakers are rushing to cut their dependence on foreign chips in an echo of how their dominance of battery technology gave them an upper hand in making electric vehicles."}],[{"start":23.05,"text":"Underlining the Chinese ambitions, BYD, the Shenzhen-based world’s biggest EV producer, in May unveiled the Xuanji A3, the first autonomous-driving chip designed by its 7,000-strong semiconductor research team."}],[{"start":37.4,"text":"“BYD is now capable of supplying all the key chips required for intelligent vehicles,” said BYD founder Wang Chuanfu at an event where he plucked the AI chip from his breast pocket and held it aloft. “Whatever computing power we need in the future, we will be able to provide it ourselves.”"}],[{"start":56.65,"text":"Chinese companies rely on Taiwan Semiconductor Manufacturing Company, South Korea’s Samsung and Germany’s Infineon to fabricate almost all the high-end AI chips they use, analysts say. But the progress being made in designing semiconductors for the car sector is a step towards the chip self-sufficiency that has for years been a core goal of Beijing’s industrial policy."}],[{"start":79.8,"text":"BYD, which manufactures its own lower-end semiconductors, is part of a growing list of Chinese carmakers designing chips with AI functions that includes Nio, Xpeng, SAIC, Changan, Great Wall Motor, Li Auto and Geely."}],[{"start":null,"text":"

"}],[{"start":95.5,"text":"Carmakers are also entering more partnerships with local chip developers including Huawei, Horizon Robotics, Black Sesame and Oritek, posing a long-term threat to the hefty revenues that US, European and Japanese chip designers generate from China’s automotive sector. "}],[{"start":110.7,"text":"More than 50mn EVs, including battery-only cars and plug-in hybrids, are on China’s roads and despite slowing growth another 14mn are forecast to join them this year. New EVs in China typically contain nearly twice as many chips as cars with internal combustion engines, according to analysts, and their value per vehicle can be as high as $2,000."}],[{"start":134.8,"text":"Jimmy Yu, a technology analyst at UBS, said he expected car applications to be a crucial growth driver for the Chinese semiconductor design industry over the next three to five years."}],[{"start":146.65,"text":"While Beijing was not forcing carmakers to use Chinese-made chips, the “potential risks” of being denied access to foreign semiconductors in the future were motivating the industry, Yu said. He cited concerns BYD could be hit with restrictions on access to US technology similar to those imposed on Huawei."}],[{"start":null,"text":""}],[{"start":164.3,"text":"Highlighting that risk, the Pentagon last month reinstated BYD to a blacklist of Chinese companies deemed to pose a national security risk to the US because of alleged connections to the People’s Liberation Army. BYD denies the allegation. "}],[{"start":179.9,"text":"According to UBS data, the ratio of domestically developed “power discrete” semiconductors used to manage electrical power use in Chinese EVs ranges from 20 per cent to more than 40 per cent, depending on the type of chip."}],[{"start":193.5,"text":"“The Chinese are a huge issue,” said one Japanese semiconductor executive, who asked not to be named. “On automobiles, they’re twice as fast . . . they’re still behind [on power chips] but it’s only a matter of time.”"}],[{"start":205.25,"text":"For “analogue” chips, which convert real-world signals into electronic ones, the UBS data puts the ratio of Chinese-developed supply at about 15 per cent."}],[{"start":215.7,"text":"US, European and Japanese designers and manufacturers dominate supply of the most sophisticated chips, including those used for AI. Executives say most Chinese EV makers that are deploying AI functions for driverless cars rely on Nvidia-designed chips. But as the carmakers move to mass-production, they want specialised chips that will work better with their in-house software and be cheaper."}],[{"start":null,"text":""}],[{"start":241.79999999999998,"text":"For example, BYD claims Xuanji A3 achieves 20 per cent lower power consumption for the same level of computing performance as peer products including Nvidia’s. Nio has said using the company’s in-house AI chip could save the EV company about Rmb10,000 ($1,480) per vehicle."}],[{"start":262.59999999999997,"text":"“These chips from Nvidia . . . there’s lots of stuff on there you cannot use, but you have to pay for it,” said a European auto executive who works closely with Chinese chip developers."}],[{"start":273.04999999999995,"text":"BYD’s vertical integration of its supply chain from batteries to electric motors and now chips for autonomous driving has been a central feature of its rapid ascent to the world’s largest EV maker, allowing it to bring down costs and develop vehicles faster than western rivals."}],[{"start":289.74999999999994,"text":"But an engineer at Horizon Robotics, a Shanghai auto chip design group that has partnered with Volkswagen, said that while many EV makers were trying to develop chips in-house, it was likely that only a “small number of companies” would be able to end their reliance on external suppliers."}],[{"start":306.44999999999993,"text":"The engineer, who asked to be identified only by his surname Luo, said the auto sector might ultimately follow the evolution of the smartphone industry, with most brands depending on chips designed and fabricated by others."}],[{"start":319.19999999999993,"text":"Some Chinese carmakers, including mass-market EV maker Leapmotor, say the high cost of research and development, software integration and meeting safety requirements meant chips, like batteries, should be left to their suppliers."}],[{"start":334.19999999999993,"text":"But increasingly those suppliers are Chinese design companies and car parts makers that are also keen to expand overseas."}],[{"start":341.3499999999999,"text":"Analysts from S&P Global’s automotive industry intelligence unit said last year the Chinese automotive industry’s drive for chip independence could “significantly reshape the global automotive electronics supply chain”."}],[{"start":354.3499999999999,"text":"Kyle Chan, a technology expert at the John L Thornton China Center at US think-tank Brookings, said that while developing custom chips offered potential cost and performance benefits to carmakers, Beijing’s drive for tech autonomy had been crucial in persuading them to do so."}],[{"start":371.44999999999993,"text":"“Many Chinese EV makers were previously reluctant to switch away from foreign auto chips,” Chan said. “They had to be prodded along by Chinese policymakers.”"}],[{"start":380.79999999999995,"text":"Additional reporting by Kana Inagaki in London"}],[{"start":391.65,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1782899678_5906.mp3"}