Jan 08, 2025 07:00:00

The Chinese government wants to increase self-sufficiency in automotive semiconductors

As the conflict between the United States and China over semiconductors deepens, the Chinese government is supporting the semiconductor industry in an effort to supply semiconductors domestically so as not to put a brake on the growth of the electric vehicle industry, but a government official said, 'We are still dependent on foreign-made semiconductors.'

China struggles to build car chip chain supply to break free of heavy reliance on imports | South China Morning Post

https://www.scmp.com/tech/tech-war/article/3292988/china-struggles-build-car-chip-supply-chain-break-free-heavy-reliance-imports

Beijing Pushes to Use China-Made Chips in Its EVs - WSJ

https://www.wsj.com/tech/beijing-pushes-to-use-china-made-chips-in-its-evs-d89212de

Samsung May See 40% Profit Drop in 2025 Due to Semiconductor Struggles
https://samlover.com/2025/01/01/samsung-may-see-40-profit-drop-in-2025-due-to-semiconductor-struggles/

The United States has been severely restricting the export of semiconductor technology to China due to concerns that semiconductors may be diverted for military use, while China has retaliated by banning the export of rare metals to the United States , deepening the conflict.

The United States plans to further strengthen semiconductor technology restrictions on China - GIGAZINE

In this situation, the Chinese government will invest more than 7 trillion yen in May 2024 to support the domestic semiconductor industry in order to increase self-sufficiency in semiconductors, and has requested that automakers 'source 25% of their semiconductors domestically by 2025.'

China invests more than 7 trillion yen to promote domestic semiconductor industry - GIGAZINE

Electric vehicles are booming in China, and as of November, production of electric vehicles in 2024 is expected to increase 37.5% year-on-year to 11.49 million units, accounting for 40.8% of all vehicles. The amount of semiconductors used in a normal car is about 600 to 700 units, but an electric car requires about 1,600 semiconductors, and smart cars, which are expected to grow in the future, will require about 3,000 semiconductors.

At an industry conference held in June 2024, the president of Ceres, a mid-sized Chinese automobile company, predicted that the proportion of semiconductor costs in the total cost of an automobile will rise from 4% in 2019 to 20% in 2030. In anticipation of further increases in demand for semiconductors in the future, the Chinese government is putting effort into developing the semiconductor industry.

However, according to an official from

the Ministry of Industry and Information Technology of the People's Republic of China , China's self-sufficiency rate for automotive semiconductors will be less than 10% as of January 2025. While the self-sufficiency rate for power and memory-related semiconductors has risen to about 8%, the self-sufficiency rate for computing and control-related semiconductors is less than 1%, with foreign companies leading by an overwhelming margin.

With the Chinese government supporting the semiconductor industry as a national policy, many automakers and startups are entering the chip development race. Shanghai NIO and Xpeng Auto announced that their self-developed smart driving chips have completed the final design stage tape-out. Affected by the intensifying semiconductor development race, South Korea's Samsung is expected to see a 40% decrease in operating profit in 2025.