Boom in smart vehicles drives Chinese carmakers and third-party producers like Black Sesame to ramp up auto chip output
Chinese car chip makers have emerged as winners amid the growing popularity of intelligent vehicles in the world's largest automobile market, according to industry executives.
After a shortage of auto chips only two years ago, Chinese carmakers have ramped up in-house production and third party suppliers such as Horizon Robotics and Black Sesame have also joined the fray, as Chinese smart vehicles go from strength to strength at home and overseas.
With China still unable to develop advanced chips such as those used in the latest smartphones and laptops due to US sanctions, the country has formed an army of producers that are able to churn out mature node chips for use in cars. Guangdong province alone said it had 8,900 registered car chip makers by the end of 2022.
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China's car chip output in 2023 is expected to reach US$17.2 billion, up 55 per cent from the value output size in 2018, according to a report by Askci Consulting Co. Horizon Robotics, founded in 2015, has reached a new deal with BYD as the Chinese car maker's proprietary BEV (Bird's Eye View) perception solution powered by Horizon Robotics' Journey 5 computing processor readies for mass production this year.
Black Sesame, which makes system-on-a-chip (SoC) designs that help with auto-driving assistance, said it is working with Baidu on its car systems. Under a partnership agreement, Baidu said it will combine its intelligent driving solutions with Black Sesame's chips to create an integrated system slated for release later this year.
Meanwhile, Nanjing SemiDrive Technology, founded in 2018 in eastern Jiangsu province, announced it is appointing Cheng Taiyi, a semiconductor veteran, to become its chief executive and that it has secured a strategic partnership with carmaker Unity China on a smart car cockpit.
As the development of intelligent vehicles continues, chips related to autonomous driving and intelligent cockpits are developing fast, according to Xiang Weili, an executive director with Frost & Sullivan Greater China.
"Domestic and foreign market giants are flocking [to the sector] ... the lack of chips in car companies has triggered a business explosion for many domestic chip companies," said Xiang.
SemiDrive counts Sequoia Capital, Walden International, and Matrix Partners as investors. Horizon Robotics has attracted equity investors like Hillhouse Capital and IDG Capital.
One industry car supply chain expert, who declined to be named due to the sensitivity of the matter, said more companies are trying to test the possibility of using domestic chips as geopolitical tensions remain a risk, although global chips are still preferred if they can be accessed.
Price is also a key factor for domestic intelligent carmakers.
"I have always asked [carmakers], are they willing to pay more for a domestic chip solution? ... in private exchanges, they said that if the supply can be guaranteed then they [are open to this]," said Rob Chu, Baidu corporate vice-president and general manager of the firm's Apollo Self Driving unit, during a media event last month.
"Cost is the main challenge for many companies. After our discussions with several companies, we chose Black Sesame because my plan's functionality and cost were matched," said Chu.
Analysts point out that in the microcontroller units (MCU) field, global giants such as Renesas Electronics and NXP Semiconductors remain long-time leaders so domestic car chip makers have focused more on artificial intelligence (AI) and SoC solutions.
"Currently, many companies are developing AI chips. This has become a hot investment trend. However, there are relatively few companies developing MCU chips, " said Zhang Xiang, a visiting professor at the engineering department of Huanghe Science and Technology University.
"The price and development difficulty of AI chips is relatively high. If successful though, developers will have higher profits and prices," said Zhang. "AI chips are a new thing, and domestic and international companies are not much different in this regard."
Frost & Sullivan's Xiang also noted that "the importance of AI chips is increasingly prominent".
"At this stage, AI chips used for car decision-making and control have data, computing power, and algorithms as the three major elements," said Xiang. "Since AI algorithms need to exchange large amounts of data with memory, this and bandwidth are currently important factors restricting the utilisation rate of computing power, which will be a key focus for manufacturers looking for breakthroughs."
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.
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