China sets goal for local carmakers to get a quarter of their chips domestically by 2025

Yet another technological self-sufficiency target for China

The Chinese government says the country's car manufacturers should aim for a quarter of their chips to be sourced from China-based foundries by 2025.

The goal comes from China's Ministry of Industry and Information Technology, according to a Nikkei report. Currently, Chinese car makers get only about ten percent of their chips locally, and to hit 25 percent, they will need to more than double their usage of domestically produced semiconductors.

Not only does the ministry want to see the carmakers up local semiconductor use in terms of volume, but also in value, presumably because it wants local makers to enjoy good profit margins instead of growing by cutting prices.

Achieving these figures won't be mandatory for Chinese car brands, but they will be rewarded based on a credit system for hitting targets.

The long term goal, however, is to use exclusively Chinese-produced processors for cars. The report doesn't mention a specific date for when this is expected to happen or if the Chinese government even has any idea when the industry can get to 100 percent usage of Chinese semiconductors.

Using more native processors isn't the only ambition, as the government would also like other components produced in China to see more utilization, including displays, chargers, and more.

Chinese cars built with Chinese components aren't too likely to end up in the US, which just jacked up its tariffs on electric vehicles from the Middle Kingdom to 100 percent; one senator even suggests banning them outright. The EU might also not see too many of these cars if it implements similar tariffs, which the 27-nation bloc has mulled over since last year.

The ultimate reason for making more cars with Chinese components is one the country has been pursuing for a while now: technological autonomy. The many sanctions the US and the wider Western world has placed on China limits its ability to access the latest processors, cutting-edge semiconductor processes, and intellectual property. To keep pace with the Western world, China will need to develop its own alternatives.

On the advanced semiconductor front, China is not expected to achieve parity with the US, the EU, Korea, or Japan any time soon. However, China may become an even bigger manufacturer of mature chips, which are the kind that are usually used in cars, making it feasible for the Middle Kingdom to become self-reliant in the realm of automobile processors.

Though, replacing other components will reportedly be more challenging, for example when it comes to standard parts such as for brakes, it will be difficult to convince car manufacturers to switch. ®

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