Automotive chips are the “brain” and “nervous system” of modern vehicles, determining their performance, functionality, safety, and intelligence level. As vehicles evolve towards electrification, intelligence, connectivity, and sharing, the importance of chips is increasing day by day.
1. Overview of the Automotive Chip Industry
Automotive chips refer to semiconductor integrated circuits specifically used in automotive electronic systems. Compared to traditional consumer electronics chips, they have extremely stringent requirements for reliability, safety, durability, and operating temperature range. There are various types of automotive chips, which can be mainly classified by function into control chips, computing chips, power semiconductors, sensor chips, communication chips, and memory chips.
2. Development Policies of the Automotive Chip Industry
The relevant government departments in China have issued a series of policies to support the development of the automotive chip industry, covering various aspects such as industrial planning, standard formulation, financial support, and ecosystem construction, aiming to break through technical bottlenecks, increase the localization rate, improve the industrial ecosystem, and promote the autonomous and high-quality development of the automotive chip industry. For example, the “Digital Transformation Implementation Plan for the Electronic Information Manufacturing Industry,” “Notice on Carrying Out Pilot Work for Automotive Circulation and Consumption Reform,” and “Notice on Promoting the Development of Mobile IoT ‘Everything Connected'”.
3. Current Development Status of the Automotive Chip Industry
1. Control Chips (MCU): The ‘Basic Commander’ of Vehicles
Every automotive electronic control unit (ECU) must have an MCU, responsible for executing simple control commands. In 2024, the market size of automotive MCUs in China is expected to reach 26.8 billion yuan, a year-on-year increase of 3.47%, and is projected to reach 29.4 billion yuan in 2025, steadily progressing.
2. Computing Chips (SoC): The ‘Computational Power’ for Intelligent Driving
New energy vehicles need to process massive amounts of data for autonomous driving, and traditional MCUs are no longer sufficient. SoCs have become the mainstay—powerful in computation, fast in data transmission, and capable of reducing chip usage while allowing flexible software upgrades. In 2024, the market size of automotive-grade SoCs in China is expected to reach 38.1 billion yuan, a year-on-year increase of 42.7%, and is projected to surge to 53.6 billion yuan in 2025, showing the fastest growth.
3.Power Chips: The ‘Energy Manager’ of New Energy Vehicles
Power chips are responsible for managing the vehicle’s electrical energy, essential from charging to driving, with global demand on the rise. In 2024, the global automotive power semiconductor market is expected to reach 150.6 billion yuan, a year-on-year increase of 5.91%, and is projected to reach 161.8 billion yuan in 2025.
4.Sensor Chips: The ‘Environmental Detector’ of Vehicles
Sensor chips can collect data such as tire pressure, temperature, and acceleration, helping vehicles perceive their surrounding environment. In 2024, the market size of automotive wireless sensor SoCs in China is expected to reach 1.1 billion yuan, a year-on-year increase of 22.2%, and is projected to reach 1.4 billion yuan in 2025.
5.Analog Chips: The ‘Signal Converter’ of Automotive Electronics
With the increasing number of electronic devices in new energy vehicles, analog chips are responsible for converting electrical signals, and demand is rising. In 2024, the market size of automotive analog chips in China is expected to reach 37.1 billion yuan, and is projected to reach 44.9 billion yuan in 2025, with growth exceeding the global average.
6.Industry Landscape: Domestic Breakthroughs, High-End Still Relies on Imports
Domestic companies such as Horizon Robotics and BYD Semiconductor have already begun to compete with international giants in the fields of intelligent driving chips and power semiconductors, but the overall self-sufficiency rate remains low—high-end main control chips and sensors are still dominated by foreign companies like NXP and Infineon.
4. Future Prospects of the Automotive Chip Industry
1.Supportive Policies: Funding and Planning in Place
The government is using a combination of “planning + funding + standards” to support the industry: the top-level planning clearly states the need to tackle automotive-grade chips, with the National Integrated Circuit Industry Investment Fund investing 344 billion yuan in its third phase, focusing on breakthroughs in advanced technologies below 14nm; purchasing domestic equipment can also receive a 30% subsidy, with a target of over 50% localization rate for advanced equipment by 2028; automotive companies using domestic chips can also receive procurement subsidies, forming a virtuous cycle of “automakers needing, chip manufacturers producing”.
2.Explosive Demand: New Energy Vehicles Drive Chip Growth
New energy vehicles have led to a surge in chip demand: in terms of electrification, the market for silicon carbide (SiC) power chips is expected to reach nearly $10 billion by 2029, with BYD and StarPower already in mass production, and the localization rate rising from 5% in 2020 to 40% in 2025; in terms of intelligence, the penetration rate of L2 and above autonomous driving is expected to reach 50% by 2025, leading to a huge demand for high-performance SoCs, with domestic chips from Horizon Robotics and Huawei already selling over 5 million units. Moreover, due to the instability of international supply chains, automotive companies are seeking domestic chips, such as Great Wall using Horizon chips, and Geely collaborating with Jita Semiconductor for tighter integration.
3.Industry Chain Collaboration: From ‘Solo’ to ‘Team Battle’
The domestic automotive chip industry chain is no longer “fighting alone,” but rather working together across the supply chain: on the design side, Horizon Robotics and Black Sesame Intelligence are developing high-performance SoCs, while Huawei’s open-source platform helps automotive companies reduce development costs by 30%; on the manufacturing side, SMIC’s 14nm automotive-grade production line has a yield rate exceeding 95%, and Hua Hong Semiconductor’s 8-inch production line is fully operational, supplying BYD; on the packaging and testing side, JCET and Tongfu Microelectronics are advancing automotive-grade technologies.
There are also regional clusters, such as Wuxi focusing on the entire chain and Shijiazhuang developing a complete vehicle ecosystem, forming a pattern of “R&D in the Yangtze River Delta, manufacturing in Chengdu-Chongqing, and application in Beijing-Tianjin-Hebei.” Additionally, the exploration of the RISC-V open-source architecture can help us break free from foreign technology monopolies, with Great Wall and Horizon planning to have more than five RISC-V chips validated for vehicles by 2025, aiming for a 30% market share by 2030.
Building a complete chain from design to manufacturing to packaging and testing, the Shijiazhuang High-tech Development Zone is creating a complete ecosystem for vehicles, components, and the Internet of Vehicles, forming a collaborative pattern of “R&D in the Yangtze River Delta, manufacturing in Chengdu-Chongqing, and application in Beijing-Tianjin-Hebei.” Furthermore, the exploration of the RISC-V open-source architecture lays the foundation for an independent instruction set ecosystem, with companies like Great Wall Motors and Horizon planning to complete the validation of more than five RISC-V chips for vehicles by 2025, aiming to exceed 30% market share by 2030, gradually dissolving the technological monopoly of international giants.
