In a noteworthy development, major Chinese automakers are intensifying their efforts to secure a domestic supply of semiconductors. This move comes as Beijing aims to establish a resilient supply chain that is less vulnerable to U.S. trade restrictions. Great Wall Motor, among others, has announced a significant breakthrough in producing power semiconductors, which plays a pivotal role in the rapidly evolving Chinese auto industry, especially with the shift towards electric and autonomous vehicles.
Fu Bingfeng, the executive vice president of the China Association of Automobile Manufacturers (CAAM), highlighted the increasing importance of semiconductor devices in the global automotive arena. He emphasized the need to create a robust automotive semiconductor industry in light of growing protectionist tendencies.
CAAM has also established a dedicated committee focused on automotive semiconductors, clearly indicating China’s ambition to enhance self-sufficiency in this critical component. Power semiconductors are particularly crucial as they control the electric current flow, directly impacting the driving range of electric vehicles. Notably, BYD, a leading Chinese electric vehicle manufacturer, already manufactures its power semiconductors in-house.
Great Wall’s venture into power semiconductor production commenced at a new facility in Wuxi, operated by their subsidiary, Wuxi Xindong Semiconductor Technology. These semiconductors find application in Haval sport utility vehicles, further underscoring China’s efforts to localize semiconductor production.
Furthermore, China’s automotive sector has made significant strides in developing chips for data processing, a complex endeavor due to the intricate microengineering involved. Companies like Zhejiang Geely Holding Group have introduced cutting-edge chips, such as the Longying One, utilizing advanced 7-nanometer technology for driver assistance features.
China’s government has been actively promoting advancements in the auto industry, particularly through initiatives like Made in China 2025, which have provided tax incentives and subsidies to the new energy vehicle and semiconductor sectors. This support has contributed to China becoming a global leader in new energy vehicle sales.
Despite these achievements, semiconductor production remains a bottleneck in China’s ambitions for electric and autonomous vehicles. An electric vehicle requires significantly more semiconductors than traditional gasoline-powered vehicles, and China currently produces only a fraction of the power semiconductors and advanced chips needed for autonomous driving.
In response to U.S. trade restrictions on chips, China is taking measures to nationalize the production of advanced system-on-chip (SoC) devices. This urgency was evident in a meeting convened by former Minister of Industry and Information Technology, Miao Wei, who urged major automakers to shift their semiconductor procurement to Chinese sources.
While many automakers are concentrating on power semiconductors, which are not subject to U.S. export restrictions, some are involved in SoC design but rely on contract chipmakers for production. Companies like Semiconductor Manufacturing International Corp. (SMIC) are expanding their production capacity to develop automotive chips, signifying a broader effort to bolster China’s semiconductor industry.
In conclusion, China’s automotive industry is strategically positioning itself to reduce its dependence on foreign semiconductor suppliers and enhance its self-sufficiency, recognizing the critical role of semiconductors in the electric and autonomous vehicle revolution. This endeavor requires substantial investment and coordination, but it aligns with China’s ambition to strengthen its position in the global automotive market.