China automotive industry eyes chip self-reliance

The COVID-19 chip shortage intensified the drive for self-sufficiency. While it caused severe disruptions to the global automotive industry, the impact on mainland China’s automotive industry was relatively limited, highlighting the advantages of localization and vertical integration.

With vehicle sales in mainland China continuing to grow, OEMs are urging tier 1 suppliers to set up local production, prompting tier 2 and tier 3 suppliers to increase domestic sourcing.

For instance, BYD, the largest customer of Qualcomm's cockpit SoCs, has adopted MediaTek's MT8678 (3nm) chip for its Yangwang U8L vehicle, which was launched at the Shanghai Auto Show 2025. MediaTek is a Taiwan-based tier 1 supplier.  Additionally, BYD recently launched the BYD9000 chip, a customized version of MediaTek's MT8673 (4nm), which powers the Denza Z9 model.

Despite growing interest from mainland Chinese OEMs, global tier 1 suppliers continue to rely on established SoC providers like Qualcomm, citing technical challenges in integrating newer alternatives such as MediaTek into existing platforms.

To improve standards for domestically produced chips, MIIT unveiled guidelines to construct a national automotive chip standard system in December 2023. These guidelines are designed to accelerate the development and practical adoption of mainland China’s automotive industry chip standards, as well as support innovation in chip research and deployment.

The guidelines are structured to roll out in stages, with an initial focus on universally applicable standards and critical products. These will encompass foundational criteria, such as environmental resilience and reliability, electromagnetic compatibility, functional safety and information security.

MIIT aims to develop more than 30 automotive chip standards by 2025, which meet the fundamental requirements for product security, reliable application and pilot trials. By 2030, the target will increase to more than 70 standards to achieve full coverage of typical application scenarios (powertrain, chassis, body, cockpit and ADAS).

Mainland China holds a dominant position in several strategic segments of the electric vehicle value chain, from producing critical raw materials for motor magnets to leading in battery manufacturing and technological innovation. Mainland Chinese OEMs are also prominent in the power electronics sector and, as the automotive supply chain evolves, are extending their reach into SoC and microcontroller unit (MCU) markets.

On a practical level, mainland Chinese automakers have already established close partnerships with domestic SoC foundries such as Semiconductor Manufacturing International Corporation (SMIC) and CanSemi Technology to support the verification and deployment of local chips within the automotive sector.

Still, significant technical challenges persist. Chinese automakers continue to depend heavily on US suppliers for advanced chips, including Nvidia’s AI processors and Qualcomm’s smart cockpit platforms, which are essential for autonomous driving and intelligent vehicle systems. Prolonged technology tensions between mainland China and the United States could put these automakers at risk of serious supply disruptions.

To address these challenges, mainland China is not only focusing on developing domestic chipmakers but also encouraging foreign chipmakers to localize their manufacturing within mainland China. European chipmakers such as STMicroelectronics, NXP and Infineon are deepening ties with mainland Chinese foundries to establish onshore production.

However, this push is part of a broader mainland Chinese strategy to reduce reliance on foreign suppliers overall and to meet automakers’ growing need to control costs. Traditionally, automotive chips underwent extensive validation, including multiyear qualification cycles and exposure to extreme environmental conditions, often stretching development timelines to five years.

The mainland China automotive industry’s drive for chip independence is gaining momentum. Backed by government policies, market demands and geopolitical pressures, this shift is influencing the technology strategies of domestic automakers and could significantly reshape the global automotive electronics supply chain.

In the coming years, mainland China is likely to intensify its efforts in advanced fields such as autonomous driving and smart cockpits, with the goal of achieving substantial progress toward chip self-sufficiency.