Chinese automakers pursue full domestic chip production by 2027

China is advancing towards self-reliance in semiconductor production as its automakers plan to utilize exclusively domestically made chips in new vehicle models. As of 2025, companies including SAIC, Changan, BYD, Geely, Li Auto, and Great Wall are preparing to launch new models featuring domestically produced chips by as early as 2026. This initiative is aligned with China's broader objectives amidst increasing technological tensions with the U.S. and is being spearheaded by the Ministry of Industry and Information Technology. The Ministry has actively encouraged automakers, particularly state-owned enterprises, to evaluate and boost the use of local chips. Currently, many Chinese manufacturers still depend on foreign chip suppliers, particularly for advanced automotive features such as autonomous driving. Notable foreign companies like Nvidia and Qualcomm provide key technologies for smart cockpits and AI-driven systems, while efforts by domestic companies to shift to localized supplies are escalating. Some suppliers have noted that transitioning to 100% domestic components will be challenging but are also seeing increasing momentum within the automotive industry for localization, influenced by policy pushes. As part of this transition, GAC Group is collaborating with local foundries, including SMIC and CanSemi, to test and validate homegrown chip alternatives. Executives from Chinese chip developers have indicated that key automotive clients, like Geely, have expressed a preference for locally developed chips whenever they are available. Investments in localization are not limited to chips alone; manufacturers are also looking to switch additional automotive components to domestic suppliers. There is a notable urgency to replace driver ICs and other critical components by next year. China's electric vehicle manufacturers are adapting by utilizing consumer-grade chips for non-critical functions like infotainment, catering to both localization goals and budget pressures. As major global chipmakers such as STMicroelectronics, NXP, and Infineon strengthen partnerships with Chinese foundries, the automotive chip landscape is styled for rapid evolution. Traditional automotive chips focused on microcontrollers for basic vehicle functions are giving way to advanced components necessary for computing, battery management, display, and camera systems in modern electric vehicles. However, industry watchers acknowledge that despite these efforts, China has a considerable journey ahead to achieve its semiconductor self-sufficiency goals. Estimates suggest that by 2025, a mere 17.5% of China's $185 billion integrated circuit market might be covered by domestic production.