Chinese car companies "go into the sea" to make chips

Recently , the chip field has been quite lively. Intel Core 13th/14th generation CPUs have frequently crashed, and complaints about blue screen problems have reached a climax. On the other hand, in China, on July 27, NIO announced that the world's first automotive-grade 5nm high-performance intelligent driving chip, NIO Shenji NX9031, had been successfully taped out . Xiaopeng Motors ' self-developed intelligent driving chip has also been sent for tape-out and is expected to be returned in August. The intelligent driving chip project of Ideal Auto is code-named "Schumacher" and is expected to be completed within this year. The situation is very good.

At first glance, this short message may have mistakenly suggested that NIO was moving into the chip field. After careful consideration, it was discovered that "chips and underlying software have been independently designed", which means that the vehicle-machine system and chip design have been independently controlled. NIO has not yet announced which chip manufacturer will produce them, but there are only a handful of manufacturers that can manufacture 5nm chips.

01. Why do car companies want to tackle chips?

Looking back at the days of chip shortages in the past few years, it was a pain for most car companies. In 2021, the global automobile production reduction due to chip shortages has reached 10.272 million vehicles, of which the Chinese automobile market reduced production by 1.982 million vehicles in 2021, accounting for 19.3% of the world. Automotive-grade chips are more important than ever under the general trend of electrification and intelligent networking , especially chips used in the fields of body, cockpit, safety, etc.

China's automobile industry has been affected by the global chip production cuts and special factors, and a number of companies have invested in the chip industry .

At present, new energy vehicle companies have a stronger desire to achieve chip autonomy. On the one hand , new energy vehicles have a high degree of automation and require a large number of chips, generally up to about 1,000 (twice as many as traditional fuel vehicles), and are expected to exceed 2,000 in the next few years; on the other hand, for safety reasons, the development of advanced autonomous driving and the realization of autonomous control of key technologies are necessary conditions, so achieving domestic autonomy of automotive chips is a must. In addition, reducing chip costs is also an important factor for car companies to tackle chips.

From the perspective of chip self-sufficiency, we urgently need to achieve independent automotive-grade chips. China has a huge automobile consumer market and huge demand for automotive chips, especially in the world's leading new energy vehicles, with production and sales ranking first in the world for nine consecutive years, accounting for more than 60% of the world. In the huge production and sales market of new energy vehicles, the status of chips as key components is more prominent.

At present, China's self-sufficiency rate of automotive-grade chips is not optimistic. In the China Electric Vehicle Hundred People Forum (2023), the Institute of Market Economy of the Development Research Center of the State Council revealed that China's external dependence on automotive chips is as high as 95%, the self-sufficiency rate of computing and control chips is less than 1%, and the self-sufficiency rate of power and storage chips is only 8%.

02. There are many categories and fierce competition

There are many categories of automotive chips, which can be roughly divided into five categories: MCU , power chips, memory , intelligent control driving and sensors . Among them, MCU is relatively mature in the industry chain , and intelligent driving chips are the most critical and difficult to develop.

The global automotive chip market is basically monopolized by international semiconductor giants. According to data from the China Economic Industry Research Institute, the top five manufacturers account for nearly 50%. Among them, Infineon has the highest share, with a market share of 12.7%, followed by NXP , Renesas , Texas Instruments and STMicroelectronics . Among the top 20 automotive semiconductor companies in the world, only one is a Chinese company - Nexperia.

In the intelligent driving chip market, the top five companies in terms of global intelligent driving chip installation volume from January to May 2024 are NVIDIA , Tesla , Huawei , Mobileye , and Horizon Robotics. Two of them are Chinese companies, and their market share has greatly improved compared with previous years.

Power chips account for 55% of new energy vehicle semiconductors, of which IGBT is the most important component of power semiconductors . In the power chip market, BYD ranked first with 1,042,609 installed units from January to May 2024 (data from Gasgoo).

In the field of automotive digital cockpits, Qualcomm 's 8155 in-vehicle chip is far ahead, presenting a single oligopoly competition pattern. In the domestic automobile market, nearly 90% of Chinese new energy vehicles are equipped with Qualcomm's 8155 cockpit chip. In addition to 8155, Qualcomm's 8295 chip has also been sought after by many automakers such as Leapmotor, NIO, Zeekr, Xiaomi and Mercedes-Benz.

03. Domestic automotive chips are breaking the original market pattern

Once upon a time, a chip that cost 10 or 20 yuan was actually hyped up to about 2,000 yuan. But in recent years, my country's auto companies have realized the importance of chips for intelligent driving and have spent a lot of effort in this field.

Thanks to the efforts of the government and the industry, China has made some progress in the field of automotive chips. Taking IGBT as an example, the domestic IGBT market share was about 20% in 2021, and it has rapidly increased by more than half in 2023. Power devices and semiconductor products represented by IGBT are expected to achieve more than 30% domestic substitution in 2025 and more than 50% in 2027-2028.

In the field of automotive chips, a large number of companies such as BYD, Huawei, Horizon Robotics, Black Sesame Intelligence, Core Micro, GigaDevice , Unigroup Guoxin, Zhongying Electronics, Guoxin Technology, and Nexperia Semiconductor are accelerating their layout and have already mass-produced different categories of automotive-grade chips.

Earlier this year, the Ministry of Industry and Information Technology issued the "Guidelines for the Construction of the National Automotive Chip Standard System", which proposed that by 2025, more than 30 key automotive chip standards will be formulated; by 2030, more than 70 automotive chip-related standards will be formulated, which will greatly promote the progress of my country's automotive-grade chips.

The Shenji NX9031 released by NIO this time has more than 50 billion transistors and a single-chip computing power of 256 TOPS, which is considered first-class in the industry. Although it cannot be produced independently, the chip and underlying software have been independently designed, which can be regarded as a major breakthrough.

In addition, ZTE launched the first domestic automotive-grade 5G R16 module based on a full-stack self-developed chip platform , which can be widely used in vehicle-mounted networking and other networking products (T-Box, OBU, RSU, cockpit, etc.). It will be installed on a certain model of GAC Group, and the first model is expected to be mass-produced in 2024.

Public information shows that in 2024, the localization rate of SoC (system-on-chip) in China's automotive chips will be 5-8%, the localization rate of MCU (microcontroller unit) will be close to 10%, the localization rate of IGBT/ silicon carbide power devices will be about 35%, and the localization rate of MOSFET will be about 15%. At present, the localization rate of overall automotive chips in China is around 15%, which has increased significantly compared with 5% and 10% in previous years.

Industry insiders revealed that relevant departments have required automakers such as SAIC Group, BYD, Dongfeng Motor, GAC Motor and FAW Group to increase the local procurement ratio of automobile-related chips to 20% or 25% by 2025.

The localization process of automotive chips faces many challenges, including supply and demand imbalance, technology, production lines and talent issues, which require long-term efforts to overcome difficulties. If China wants to achieve domestic substitution in the field of automotive chips, it needs to strengthen the internal coordination and external circulation of the automotive and chip industries in the short term , create a good development environment and expectations for automobile manufacturers, and promote the independent, safe and controllable chip industry.