China is making strides towards technological independence, this time focusing on the automotive industry. The government has set a target to have a quarter of microchips for cars produced domestically by 2025. This move aims to reduce reliance on foreign suppliers and bolster China’s own technological capabilities.
As reported by Nikkei, the Ministry of Industry and Information Technologies of China stated that currently only about 10% of microchips for cars are sourced from local manufacturers. To reach the 25% goal, automakers will need to more than double their usage of domestic semiconductors.
The Ministry’s objective is not just to increase the use of local chips, but also to control their costs to ensure profitability for manufacturers. While compliance with this target will not be mandatory for Chinese automakers, they will be incentivized through a loan system for meeting the specified benchmarks.
China’s ultimate aim is to eventually transition to using solely domestic processors in cars. However, specific timelines for achieving 100% utilization of Chinese semiconductors have not been disclosed.
In addition to ramping up the usage of local processors, the government is also pushing for greater integration of other components manufactured in China, like displays and chargers.
Cars made in China that incorporate Chinese components may face challenges entering the USA, which recently imposed a 100% tariff on electric cars from China. The European Union is also considering similar tariffs, a topic that has been actively discussed since last year.
The primary motivation behind China’s shift towards employing domestic components in cars is the pursuit of technological self-sufficiency. Ongoing sanctions from the United States and Europe have significantly restricted China’s access to cutting-edge processors and advanced semiconductor technologies. To stay competitive with Western counterparts, China needs to develop its own alternatives.
While China may not be able to catch up with the USA, EU, Korea, or Japan in terms of semiconductors used in mobile processors in the near future, the country has the potential to emerge as a major player in manufacturing automobile chips, where extreme performance is not as critical.
Replacing other car components, such as standard brake parts, poses a more formidable challenge. Automobile manufacturers may not immediately embrace such changes, but feasibility is not out of reach.