China’s electric car race is increasingly turning to semiconductors

BEIJING – Chinese electric car companies already locked in an intense price war are turning up the heat on another front: chip-powered tech features such as driver assistance.

Nio And Xpeng have announced that their in-house designed automotive chips are ready for production. Until now, many of the major Chinese electric car manufacturers have relied on this Nvidia chips, with the company’s automotive chips business bringing in more than $300 million in revenue per quarter in recent years.

“It’s hard to say your product is superior when your competitors use the exact same silicon to power their infotainment and intelligent driving systems,” says Tu Le, founder of consultancy Sino Auto Insights, explaining why EV makers are turning to internal electric cars. chips.

Le said he expected it Tesla and Chinese electric car startups to compete in designing their own chips, while traditional automakers will likely still rely on Nvidia and Qualcomm “for the foreseeable future.”

Nvidia reported a 37% year-over-year increase in automotive segment revenue to $346 million in the latest quarter.

“The automotive sector was a key growth driver this quarter, as every automaker developing autonomous vehicle technology uses NVIDIA in its data centers,” the company’s management said during an earnings call, according to a FactSet transcript.

“I think the main reason why Chinese [automakers] NB [to] The self-development system-on-chip is Tesla’s success in full self-driving,” he says Alvin Liu, a Shanghai-based senior analyst for Canalys.

In 2019, Tesla reportedly switched from Nvidia to its own company own chip for advanced driver assistance functions.

By designing their own chips, Chinese automakers can customize features and reduce supply chain risk from geopolitical tensions, Liu said.

However, Liu does not expect a significant impact for Nvidia in the short term, as Chinese automakers will likely test new technology in small batches at the higher end of the market.

Nio said yes at the end of July finished designing an automotive-quality chip, the NX9031, which uses a highly advanced 5-nanometer manufacturing technology.

“It is the first time that the five-nanometer process technology has been used in China’s auto industry,” said Florence Zhang, consulting director at China Insights Consultancy, according to a CNBC translation of her remarks in Mandarin. “It has broken the bottleneck of domestic research and development of intelligent driving chips.”

Nio, which teased the chip in December, plans to use it in the high-end ET9 sedan, due for delivery in 2025.

The 5 nanometer technology is the most advanced for cars because the 3 nanometer technology is mainly used for smartphones, personal computers and artificial intelligence-related applications, CLSA analyst Jason Tsang said after the Nio chip announcement.

Xpeng did not reveal at its event on Tuesday which nanometer technology it used for its Turing chip. The company’s driver assistance technology is widely regarded as one of the best available in China today

While Xpeng unveiled its chip on Tuesday, Xpeng President Brian Gu emphasized in a CNBC interview the day before that his company will primarily collaborate with Nvidia on chips.

The two companies have a close relationship and Xpeng’s former head of autonomous driving Joined Nvidia last year.

Giants in China’s auto industry also recognize the importance of chips for cars.

If batteries formed the basis for the first phase of electric car development, semiconductors form the basis for the second phase of the industry as it focuses on smart connected vehicles. BYDThe country’s founder, Wang Chuanfu, said this at a press conference held by Chinese in April driver-assist chip company Horizon Robotics.

Wang said more than 1 million BYD vehicles use Horizon Robotics chips.

BYD announced on Tuesday that its off-road vehicle brand Fang Cheng Bao would do so Take advantage of Huawei’s driver assistance system.

US restrictions on sales of Nvidia chips to China have not directly affected automakers, as the cars so far do not require the most advanced semiconductor technology.

But as more attention is paid to driver-assistance technology, which relies more on artificial intelligence – a segment at the center of the US-China technology competition – Chinese automakers are turning to in-house technology.

Looking ahead to the next decade, Xpeng founder He Xiaopeng said on Tuesday that the company plans to become a global artificial intelligence automotive company.

When asked about the availability of computing power for training driver assistance technology, Xpeng’s Gu told reporters on Monday that the company had worked with Alibaba Cloud prior to the US restrictions. He claimed that Xpeng will now likely have the largest cloud computing capacity of any automaker in China.

Government incentives, from subsidies to support for building a battery-charging network, have helped electric cars boom in China, the world’s largest car market.

According to industry data, the penetration of new energy vehicles, including battery-only cars and hybrid cars, exceeded 50% of new passenger cars sold in China for the first time in July.

That scale means companies involved in developing electric cars in the country are also helping to set new standards in automotive technology, such as eliminating the need for a physical key to unlock the door. Instead, drivers can use a smartphone app.

How that app or device securely connects drivers to their cars is part of the upcoming set of standards that the California-based Car Connectivity Consortium is working on, President Alysia Johnson said.

A quarter of the organization’s members are based in China, including Nio, BYD, Zeekr and Huawei. Apple, Google and Samsung are also members, Johnson revealed.

She said the organization wants to enable a Nio car driver using a Huawei phone to securely send the car key to a partner who uses an Apple phone and drives a Zeekr car, for example.

“Digital key technology is becoming a lot more accessible than people might think,” she said.