The Number of Automotive Chip Companies Exceeds 300 in China in 2023

原標題：The Number of Automotive Chip Companies Exceeds 300 in China in 2023

BEIJNG, January 19 (TMTPost) -- "There were only a few dozen companies making automotive chips according to a survey in 2020. By 2023, the number jumped to over 300, which means automotive chips have become a highly competitive field," said Yuan Chengyin, Director and General Manager of the National New Energy Vehicle Technology Innovation Center, at a recent event.

The soaring popularity of new energy vehicles (NEVs) and the chip shortage caused China’s domestic chip industry to expand quickly.

According to data from the China Association of Automobile Manufacturers, China's automobile sales reached a historic high of 30.94 million units in 2023. The sales volume of domestic passenger car was 26.06 million units, a year-on-year increase of 10.6%. Independent brand sales approached 15 million units, a year-on-year increase of 24.1%。 Its market share is 56%, increased by 6.1%.

Miao Wei, former Minister of Industry and Information Technology, previously said that in 2022, China's production of NEVs reached 7.058 million units, an increase of 96.9% compared to the previous year, accounting for over 60% of the global total. He added that the rapid growth of China's NEVs could offset the decline in consumer electronics and become a new force buoying the global chip market.

"In 2023, NEVs accounted for one-third of the entire Chinese automotive industry's production and sales. Moreover, the pressure of chip supply for automakers is not as great as in 2021 and 2022. The chip supplies have returned to normal due to the recovery of consumption and industrial consumption," Yuan said. Compared to other countries, Chinese automakers are the most diligent. While automakers in Europe and the United States are striving for a 48-month development cycle, many Chinese rivals are already shortening the development cycle to 12 months, which will accelerate the application of domestic chips.

Zhang Qiang, Chairman of SemiDrive, a leading domestic automotive-grade chip manufacturer, also believed that China is the largest and most competitive market.

"Chinese consumers have a much higher demand for intelligence than the global average, and the automotive industry is actively going global," Zhang said. There is a serious problem of overcapacity in China’s automotive industry. However, increasing exports will alleviate the problem of oversupply. If Chinese complete vehicle manufacturers and Tier 1 suppliers have a larger market, so do the Chinese chips.

However, due to differences in demand between domestic and foreign automakers, Chinese chip companies may face certain challenges when going global. Zhang believes that the quality requirements for exported models are very high. The consumer grade chips and industrial grade chips used in some domestic models cannot be applied in exported ones. Both the cost of recall and the cost of brand repair is too high. Once the collaborating party deems the product quality unsatisfactory, they will immediately stop procurement cooperation. Especially, the high reliability testing for export vehicles in terms of heat resistance, cold resistance, and durability is very strict.

At the "SemiDrive New Year Talk" event held last Tuesday, Zhang introduced that as of the end of 2023, the company had cumulatively produced and shipped more than 3 million chips, with cockpit chips exceeding 1 million pieces, covering nearly 40 mainstream models. Currently, it has worked with 90% of domestic automotive original entrusted manufacture (OEMs) and aims to gain a 20% share in the domestic market by 2025.

As of now, SemiDrive has raised over 1 billion yuan. The company is valued at 14 billion yuan, according to the Hurun Global Unicorn List.

According to Yuan, developing automotive grade chips requires long-term investment, patience, perseverance, and determination. He believes that it is different from making general integrated circuit products, such as chips for mobile phone, which can achieve mass production after about six months of R&D and iterate very quickly. However, the cycle of making automotive grade chips is longer. After the chip comes out, it takes another two to three years to complete the development of the corresponding controller and a series of verifications such as reliability and security.

"I am concerned about three specific phenomena of the industry: people rush in when it's in high demand, leave when the demand decreases, and what remains is chaos and problems," Yuan said. Automotive chip manufacturers must consider the application scenarios. They should not simply develop a highly conceptual, generic product or blindly develop a product without understanding the real user needs. This could pose significant risks.

"Currently, it is estimated that the domestication rate may vary on different products, but overall, the domestication rate of automotive chips has increased from 5% to 8 to 10%. However, there are still certain gaps in the ten major categories of chips, such as control, computing, power, drive, and communication. Whether it is IP cores or some special process technologies, there are still bottlenecks," Yuan said. The opportunity for domestic chips to be applied in vehicles has always existed, but it ultimately comes down to real and cost-effective products. However, the process of building cars with 100% domestically produced chips is still very long, "After all, our chips have not truly achieved full coverage," he said.

Zhang pointed out that SemiDrive is about to launch a next-generation integrated cockpit chip and next-generation high-performance MCU for regional controllers. The company will strengthen its development in the local market with a goal of a 20% market share by 2025, while further expanding overseas markets. "Only by integrating into the global market can we gain better recognition," Zhang said.

Zhao Yi, Deputy General Manager of ijiwei, mentioned in the event that right now is the time to develop automotive grade chips. However, he also reminded that we should realize the global competitive situation in five to 10 years. Globally, many manufacturers that make CPUs or analog chips are also engaging in automotive grade chips. Therefore, Chinese automotive grade chip manufacturers still need to improve product quality and competitiveness.

(This article was first published on the TMTPost, Author | Lin Zhijia)

標題：The Number of Automotive Chip Companies Exceeds 300 in China in 2023

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