China has the world’s largest automobile market but sources only 5% of its chips locally

In 2021, the Chinese automobile market was hit hard by the ongoing chip shortage issue. Meanwhile, a new report has revealed that while China has the largest automobile market, the domestic market uses only 5% of local chips.

If you are not familiar, the automobile industry across the globe took a drastic hit due to supply chain constraints due to semiconductors. Electric cards and energy vehicles have become more popular but the lack of chips has caused a decline in the market.

As of 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 under 10%.

As per a report from MyDrivers, this localization rate is under 5%. Despite having the largest automobile market, especially for NEVs, China only uses around 5% of domestically manufactured chips.

In the auto industry, the MCU chips are the most in short supply, notably, this chip is also the one that is basically monopolized by foreign chip makers. The only exception to this is BYD, apart from this brand, there are no other Chinese automakers that manufacture these chips.

As per an industry insider, the core chipsets for the automobile industry are basically in the ‘hands of foreign’ manufacturers. The source also added that the Chinese market has a lot of money but too little patience amongst investors. Producing these chips requires a lot of money and a minimum of 5-10 years of time to get some returns.

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