China is determined to lead the electric vehicle (EV) industry, aiming to achieve this by dominating the supply chain for the semiconductors that power these vehicles. As the country seeks to attain technological self-sufficiency in an industry that represents nearly 10% of its national GDP , it has urged its manufacturers to race ahead in the semiconductor sector for electric cars.
A Grand Plan
Major Chinese automotive groups such as SAIC Motor , BYD , Li Auto , and Geely are reportedly preparing to launch models equipped with 100% domestically manufactured chips , according to sources from Nikkei Asia. By 2026, at least two Chinese companies are expected to begin mass production of automotive semiconductors, showing early signs of progress as brands like Xpeng and Nio pivot towards using their own chips in their latest electric vehicles.
Recently, Xpeng introduced the G7 , the company’s first vehicle equipped with proprietary chips replacing NVIDIA’s offerings, boasting a performance that claims to be three times superior. Such advancements indicate a significant shift in the industry.
2027: A Key Year
With mass production of semiconductors for vehicles expected to commence, China has set an ambitious target for 2027 : achieving 100% domestic production for every chip used in its vehicles. This initiative is overseen by the Ministry of Industry and Information Technology (MIIT), which regularly engages with manufacturers to assess their adoption rates of these national chips.
Current Developments
Xpeng has recently unveiled its Turing AI chip , claiming computing power that allegedly outstrips NVIDIA’s Orin by threefold. This ambitious response to NVIDIA is designed to entice other divisions, such as Volkswagen in China, to adopt similar technologies. Their collaboration highlights the significance of this partnership in moving towards the future of EVs, as both companies strive to innovate in electric vehicle manufacturing.
Other Chinese manufacturers, including Nio , have showcased their Shenji NX9031 chip designed to enhance autonomous driving capabilities. However, there is a caveat: this chip is based on a 5-nanometer lithographic process , indicating a reliance on advanced technology that may not be fully domestic yet.
China is indeed in a sprint toward semiconductor self-sufficiency. It aims to achieve the manufacturing capability for 5nm chips , with ambitious goals set for 3nm processes by 2026. However, for now, its competitors maintain a technological edge. Consequently, companies like Nio have turned to external suppliers for their chips; details on the Shenji’s manufacturer remain undisclosed, yet its fabrication process clearly indicates it isn’t purely domestic. Similarly, Xiaomi has formed a partnership with TSMC to produce its Xring 01 , the company’s first smartphone processor that will compete directly with Apple’s A18 Pro and Qualcomm innovations. The essential question remains whether Xiaomi will extend this collaboration into the automotive realm.
China’s Path to Dominance
Understanding the success of an electric vehicle relies on three core components: batteries (for range and charging), price , and software (operating system, cabin functionalities, etc.).During the 2023 China Electric Vehicle Forum , the Market Economy Research Institute unveiled staggering statistics: China’s reliance on foreign semiconductor sources for automotive technology stood at nearly 95% .
Chips for vehicles are exceptionally diverse, including microcontrollers, memory storage devices, and sensors. Most of these can be produced with the current lithography equipment available in China. Notably, significant semiconductor suppliers such as Huawei , BYD Semiconductor , and STM Microelectronics are already active in this sector. With a focus on semiconductor leadership, alongside external manufacturers investing in Chinese software, and the country making strides in battery technologies , China is well-positioned to dominate the EV industry sooner rather than later.
A Conquest Inside and Out
The competition heaved by China does not solely occur within its borders. The nation possesses the potential to excel in international markets, including Europe . A notable example can be found in Spain , where brands like MG have topped sales charts, and giants like Chery have introduced new models like Jaecoo and Omoda .
China no longer looks to the West as a standard. Its new automotive leaders are developing a distinct identity, mastering areas where European cars lag behind, and understanding consumer needs more deeply than the European brands themselves.