Localization Rate of Automotive Chips in China Doubles, But Is Still Less Than 10%

The rise of China’s electric vehicle market has opened a window of opportunity for the development of domestic automotive chips. Although there has been significant progress in the production of Chinese-made automotive chips, the industry faces challenges in reducing its reliance on foreign chips and suppliers.

Currently, nearly 300 companies in China are developing automotive chip products, focusing on areas such as intelligent cockpits, autonomous driving, and intelligent connectivity. In 2022, the market size of automotive chips in China was US$16.7 billion, and it is expected to reach US$29 billion by 2030.

In one specific field, the NOA (Navigate on Autopilot) autonomous driving chip submarket, the market share of Horizon Robotics, a Chinese startup, has reached 49.05%, surpassing Nvidia’s 45.89%.

Chinese automotive chip companies are gradually closing the gap with traditional international giants. Initially, chips from Nvidia and Qualcomm essentially monopolized over 95% of the market. However, domestic chips like Huawei’s MDC, Horizon’s J3 and J5, and Black Sesame’s A1000 are now entering the market and becoming part of the global OEM and Tier 1 supplier system.

"The localization rate of automotive chips has increased from less than 5% in the past to 10% now, but compared to automotive chip powerhouses like Europe, America, and Japan, the gap is still very obvious," said an executive from the China Electric Vehicle 100 Association.

There are still challenges to be addressed. Internationally, countries like the U.S., Europe, Japan, and South Korea have introduced a series of restrictive measures against China, protecting their local chip industries while imposing export bans on Chinese semiconductor companies.

The Chinese automotive semiconductor industry has a weak foundation and lack industry standards. China is highly dependent on foreign sources for essential chip design tools like EDA software and IP cores.

EDA, or Electronic Design Automation, uses computer-aided design software for chip functionality design, synthesis, verification, and physical design processes. IP cores design complex, commonly used blocks in digital circuits as modifiable modules, avoiding repetitive work and significantly reducing the engineers’ workload.

In terms of testing, China currently lacks its own standards and authoritative bodies corresponding to international standards, which is a crucial factor restricting the development of automotive chips and the global expansion of automotive products.

Additionally, China lacks an application system for verifying chip compatibility at the real-vehicle level, preventing rapid iterative validation.

"The biggest pain point in the entire industry is the dominance of foreign companies in the Tier 2 automotive semiconductor sector. Foreign companies hold about 50% market share among the top five in Tier 2, and 70% among the top ten. The best domestic power semiconductors have less than a 10% market share," said Zhao Bin, Vice President of Strategic Products and Market at Yuecore Semiconductor.


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