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Beijing is pushing the Chinese car industry to source semiconductors domestically, according to a Nikkei report. “We must place more domestically produced chips in our vehicles,” said the general manager of state-owned Guangzhou Automobile Group in a recent meeting at the National People’s Congress. The Asian newspaper also cites a source claiming that Chinese carmakers last year were ordered to switch completely to domestically manufactured chips.
Boosting domestic semiconductor production has remained a key strategic goal of president Xi Jinping despite funneling billions of dollars into the industry with little to show for it. Now Xi faces even more headwinds as the US and allies are moving to deny China advanced chip-making gear. Last week, Bloomberg reported that the US will soon tighten export restrictions that were imposed in October. The Netherlands and Japan are still mulling what chip-making gear to ban.
Pivoting towards more mature nodes that are commonly used for automotive applications provides an obvious escape for China. The domestic car industry is huge both in terms of production and sales, and the market is growing strongly. Currently, Chinese carmakers source less than 5 percent of automotive chips from Chinese companies, according to data from the China Association of Automobile Manufacturers.