Back in 2021, the Chinese automobile market was severely impacted by the ongoing chip shortage issue. Meanwhile, a new report has revealed that while China has the largest automobile market, the domestic market only uses 5 percent of local chips.
For those unaware, the automobile industry across the globe took a hit due to supply constraints of semiconductors. Despite electric cars and other new energy vehicles becoming more popular, the lack of chips had caused a decline in the market. As of right now, the automobile production and sales of new energy vehicles market in China is the leader in the industry. However, the domestic market’s self sufficiency rate for auto chips is less than 10 percent.
According to a MyDrivers report, this localization rate is less than 5 percent. In other words, despite having the largest automobile market, especially for NEVs, China only uses around 5 percent of locally made chips for the cars it manufactures. In the automotive industry, the MCU chips are the most in short supply. Notably, this chip is also the one which is basically monopolized by foreign chip manufacturers. The only exception to this is BYD, but apart from this brand, there are no other Chinese automakers that manufacture this chips.
As per an industry insider, the core chipsets for the automobile industry is basically in the “hands of foreign” manufacturers. The source also added that the China market has a a lot of money but only a few players have the patience to invest. Producing chipsets require money and at least 5 to 10 years worth of time.
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