Volkswagen to make own advanced chips in China for locally made autonomous vehicles
News Summary
Volkswagen Group plans to develop its own advanced semiconductors in China to power its locally made semi-autonomous vehicles. This move aims to ramp up efforts to regain ground in the world’s largest car market amid heightened competition. Volkswagen announced on Wednesday that Carizon, a joint venture with AI chip designer Horizon Robotics, would develop a system-on-a-chip (SoC) for delivery within the next three to five years. The SoC is projected to have computing power between 500 and 700 tera operations per second (TOPS), nearly on par with Nvidia’s latest Thor processor (700 TOPS). Ralf Brandsatter, VW China’s Chairman and CEO, stated that the company is accelerating and deepening its “In China, for China” strategy, moving beyond localized production to mastering core mobility technologies. This semiconductor initiative reflects Volkswagen's commitment to further invest in the world's largest electric vehicle market.
Background
China is the world's largest automotive market and the most competitive region for electric vehicle (EV) technology development. Volkswagen has historically dominated the Chinese market, but during the EV transition, it has faced intense competition from local brands like BYD, Nio, and Xpeng, leading to erosion of its market share. To counter this challenge, Volkswagen has been implementing its “In China, for China” strategy, aimed at strengthening local R&D, production, and supply chain integration to better meet Chinese consumer demands. The joint venture with Horizon Robotics and the move to develop its own chips are critical steps in deepening this strategy, addressing the localization and autonomy of autonomous driving technology and core components. Globally, geopolitical tensions and supply chain disruption risks have prompted automakers to seek localized production and vertical integration for critical components, especially in the semiconductor sector.
In-Depth AI Insights
How will Volkswagen's move to develop its own chips impact its competitive position and profitability in China? - Reduced Dependence on External Suppliers: In-house chip development ensures a stable supply of critical components, mitigating geopolitical risks and supply chain disruptions, especially given the current uncertainty surrounding the Trump administration's technology policies towards China. - Cost Control and Customization: By developing chips internally, Volkswagen can better control costs and deeply customize chips to the specific requirements of its autonomous driving systems, optimizing performance and efficiency. - Technological Autonomy and Market Share: Localized chip R&D helps Volkswagen gain mastery over core technologies, narrowing the gap with Chinese domestic EV manufacturers in intelligent driving tech, thereby potentially increasing its market share in the highly competitive Chinese market. What does this initiative signify for China's domestic automotive supply chain and semiconductor industry? - Technology Collaboration and Talent Development: Volkswagen's collaboration with Horizon Robotics will foster technological advancement and experience accumulation for Chinese domestic semiconductor design companies in the automotive sector, potentially boosting talent cultivation and mobility. - Increased Market Competition: Volkswagen's deep localization strategy, including in-house core chip development, will further enhance its competitiveness in the Chinese market, posing greater pressure on Chinese domestic automakers, especially those reliant on external chip suppliers. - Supply Chain Integration: This move may encourage more international auto giants to pursue deep localized R&D and production in China, thereby pushing China's automotive supply chain towards higher value-added segments. Considering the geopolitical context, what are the potential risks and rewards of Volkswagen's strategy? - Potential Risks: Despite aiming for localization, advanced chip R&D could still be subject to international technology controls. Furthermore, deep collaboration with Chinese domestic companies might raise data security or technology transfer concerns in some Western markets. The long development cycle and rapid market changes also present risks of R&D failure or falling behind competitors. - Potential Rewards: Successful in-house chip development will grant Volkswagen a significant competitive advantage in the Chinese market, enhancing brand image and technological leadership. It will also provide valuable experience and cost advantages for its autonomous driving technology development globally. This move could also serve as a