China’s driverless dreams plagued by US chip addiction
China’s driverless dreams plagued by US chip addiction

China’s driverless dreams plagued by US chip addiction

Jidu Automotive’s Robocar will drive itself to the main stage at the Beijing Motor Show in April, as a testament to the pace of innovation in the world’s largest car market.

Jidu, a joint venture between search engine Baidu and carmaker Geely, is showing off Robocar after just two years of development.

It joins a list of Tesla rivals led by Nio, XPeng and Human Horizons race to develop driverless cars. But Robocar’s brains reveal a problem that threatens Chinese leader Xi Jinping’s search for technological independence.

China’s driverless car companies remain dependent on chips designed by foreign companies – mostly US groups Nvidia, Qualcomm and Intel – and manufactured offshore.

The country has a cohort of chip design houses on the rise, including MetaX Integrated Circuits and Biren Technology, and in the first half of 2021, China’s chip industry drew $ 3.85 billion. USD in venture capital, according to Deloitte. Yet they are years behind their American rivals.

Velu Sinha, a Chinese semiconductor expert at Bain & Company, said Nvidia benefited from a “decade-long lead” on the back of success with its GPU (graphics processing unit) technology.

“Billions of dollars have flowed into this space. But right now, Nvidia continues to be in a really healthy place,” Sinha said.

For Beijing, the stakes are high. Xi wants technological self-sufficiency provide a bulwark against economic and trade attacks. Xi’s increase in semiconductors and electric vehicles for industries of national importance has drawn thousands of new businesses into the market.

McKinsey, the consulting firm, has predicted that by 2040 autonomous vehicles will account for 40 percent of new vehicle sales in China, generating revenues of close to $ 1tn in vehicle sales and $ 1.1tn from mobility services.

China’s fabulous companies – the groups competing with Nvidia and Qualcomm in designing and selling chip hardware but not manufacturing – have already built up a market share of 16 percent globally, according to the Semiconductor Industry Association, a US group.

NVIDIA Drive PX computer hardware that provides autonomous driving for Tesla and Audi vehicles
Nvidia’s chips are several years ahead of their Chinese competitors © Mike NelsonEPA

They are still working to break Nvidia’s dominance. The US group has revealed that at least 18 different Chinese companies use their chips as an important part of their autonomous driving plans.

The list includes Alibaba-backed AutoX and WeRide, which have been funded by the Renault-Nissan-Mitsubishi Alliance, as well as the ride-hailing group Didi, which is backed by Apple.

Nvidia and Jidu declined to comment.

Randy Abrams, head of Asia’s semiconductor research at Credit Suisse, said Chinese EV groups should still use “the best in the race” for critical technologies.

“Nvidia is increasingly advanced in vehicle processing and also the AI ​​training and simulation work needed to develop these platforms,” ​​Abrams added.

Zeekr, a entity of Geely, has partnered with Intel Mobileye to launch a self-driving car in 2024. And Great Wall Motor, another of China’s largest traditional car manufacturers, has approached Qualcomm for its development of autonomous driving.

China faces a steep task of achieving chip self-sufficiency

China’s car chip development is still plagued by a number of “fundamental problems”, according to a China-based semiconductor consultant who asked not to be named.

It is difficult to achieve the scale needed to be competitive. In recent years, the insurmountable cost of chip development has prevented dozens of companies from breaking into the market beyond niche applications.

Meanwhile, established companies like Nvidia are recycling chip technologies that have supported the explosion of mobile phones, desktops and data centers over the past two decades.

“The Greatest Chinese [company] makes about a million cars a year, “said the semiconductor consultant, explaining that” the scale is nowhere near large enough “.

Taiwan and South Korea dominate high-end chip production

Xiao Jianxiong, AutoX’s founder and CEO, said his company was concerned about the delays that could come with working with newcomers.

“We want to move as fast as possible. We want self-driving cars to scale up quickly…. Productivity really means something to us, and the maturity of that ecosystem is really, really useful,” he said of the work on Nvidia and its ecosystem of engineers and vendors.

An additional problem for China is that local manufacturing is not an option most groundbreaking chips used by autonomous driving platforms. Foreign established companies are also cementing their dominance.

TSMC, the largest producer of processor chips, plans a capital expenditure of $ 44 billion. this year alone, which will raise them by almost half. In contrast, China’s closest rival SMIC is planning a $ 5 billion capex. Most sector specialists believe that SMIC remains approx five years after TSMC in technology development.

“Ultimately, your car has to work. It has to be delivered in scale, quality, volume and price. You can’t fake it. Your propaganda only works so far,” the consultant said.

Additional reporting by Eleanor Olcott in London and Richard Waters in San Francisco

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