Chinese Automakers Accelerate In-House Development of Automotive-Grade Chips, Driving Industry from Follower to High-End Self-Reliance

The invention of the transistor in 1947, the birth of the first integrated circuit in 1958, and the formulation of Moore’s Law in 1965 laid the foundation for the modern semiconductor industry. During the era of internal combustion engine vehicles, although automotive chip demand was substantial, these chips generally featured outdated process nodes and low unit prices, receiving little attention. With the rise of new energy vehicles (NEVs), cars are transitioning toward being “software-defined” and “AI-defined,” making chips a core enabler of vehicle intelligence and significantly increasing the number of chips used per vehicle. Currently, multiple Chinese automakers have begun developing their own automotive-grade chips: NIO launched the world’s first 5nm automotive-grade intelligent driving chip, the Shengji NX9031, leveraging full-stack in-house development and economies of scale to reduce costs; XPeng developed the Turing chip, featuring high computing power and cross-platform versatility, and has started supplying it externally; Li Auto unveiled the Mach M100 chip, emphasizing per-chip computing performance and data-driven capabilities; BYD introduced China’s first 4nm automotive-grade intelligent driving chip, covering the entire R&D chain; additionally, Geely released the DragonEagle-1, and FAW launched the Hongqi No.1. Automakers’ pursuit of in-house chip development is driven by three key considerations: first, amortizing upfront R&D investments through large-scale production to achieve long-term cost reduction; second, monetizing in-house chip technologies by supplying them externally to create a second growth curve; and third, gaining control over chip specification and design to enhance supply chain security and align with national strategic priorities. The industry is undergoing three major structural shifts: external chip supply is evolving from isolated cases to a common practice, accelerating automakers’ transformation into technology companies; not all automakers are opting for in-house development, leading to strategic divergence between those building chips and those procuring them; and domestic substitution of high-end chips is accelerating, rapidly boosting China’s automotive chip self-sufficiency rate as products progressively move up the value chain from low-end to high-end segments. China’s automotive chip industry is now at a critical juncture—transitioning from passive dependence to active leadership. Despite ongoing challenges, industry participants continue advancing technological breakthroughs, striving to shift from “followers” to “definers” in the global automotive semiconductor landscape.