China’s driverless dreams marred by US flea addiction

Jidu Automotive’s Robocar will take to the main stage at the Beijing Motor Show in April, witnessing the pace of innovation in the world’s largest automotive market.

Jidu, a joint venture between search engine Baidu and automaker Geely, introduces Robocar after just two years of development.

It joins a list of Tesla rivals led by Nio, XPeng and Human Horizons racing to develop driverless cars. But Robocar’s brain reveals a problem threatening Chinese leader Xi Jinping’s quest for technological independence.

Chinese manufacturers of driverless cars remain dependent on chips designed by foreign companies – mainly the American groups Nvidia, Qualcomm and Intel – and manufactured abroad.

The country has a growing cohort of chip design companies, including MetaX Integrated Circuits and Biren Technology, and in the first half of 2021, China’s chip industry attracted $3.85 billion in venture capital, according to Deloitte. Yet they are years behind their American rivals.

Velu Sinha, a Chinese semiconductor expert at Bain & Company, said Nvidia enjoyed a “decade head start” thanks to the success of its GPU (graphics processing unit) technology.

“Billions of dollars have been poured into this space. But at the moment, Nvidia continues to be in a very healthy situation,” Sinha said.

For Beijing, the stakes are high. Xi wants technological self-sufficiency to provide a bulwark against economic and trade attacks. Xi’s elevating of semiconductors and electric vehicles as industries of national importance has drawn thousands of new companies into the market.

McKinsey, the consultancy, has predicted that by 2040, self-driving vehicles will account for 40% of new vehicle sales in China, generating nearly $1 billion in vehicle sales and $1.1 billion dollars in mobility services.

According to the Semiconductor Industry Association, an American group, Chinese fabless companies – the groups that compete with Nvidia and Qualcomm in the design and sale of chip hardware, but not in manufacturing – have already acquired a 16% market share. in the world.

NVIDIA Drive PX hardware, which provides autonomous driving for Tesla and Audi vehicles
Nvidia’s chips are years ahead of its Chinese competitors © Mike NelsonEPA

They are still working to break Nvidia’s dominance. The US group has disclosed at least 18 different Chinese companies using its chips as a key part of their self-driving plans.

The list includes Alibaba-backed AutoX and WeRide, which was funded by the Renault-Nissan-Mitsubishi Alliance, as well as ride-sharing group Didi, which is backed by Apple.

Nvidia and Jidu declined to comment.

Randy Abrams, head of semiconductor research for Asia at Credit Suisse, said Chinese electric vehicle groups still need to use the “best of breed” for critical technologies.

“Nvidia is even more advanced on embedded processing as well as the AI ​​training and simulation work needed to develop these platforms,” ​​Abrams added.

Zeekr, a unit of Geely, has teamed up with Intel’s Mobileye to launch a self-driving car in 2024. And Great Wall Motor, another of China’s biggest traditional automakers, has turned to Qualcomm for driving development. autonomous.

China faces daunting task to gain chip self-sufficiency

China’s automotive chip development is still plagued by a series of “fundamental problems”, according to a China-based semiconductor consultant, who asked not to be named.

Achieving the scale needed to be competitive is difficult. In recent years, the prohibitive cost of chip development has prevented dozens of companies from entering the market beyond niche applications.

Meanwhile, incumbents such as Nvidia are repurposing chip technologies, which have underpinned the explosion in mobile phones, desktops and data centers over the past two decades.

“The greatest Chinese [company] makes about a million cars a year,” the semiconductor consultant said, explaining that “the scale just isn’t big enough.”

Taiwan and South Korea dominate high-end chip production

Xiao Jianxiong, founder and chief executive of AutoX, said his company is concerned about delays that may occur when working with newcomers.

“We want to go as fast as possible. We want to rapidly evolve self-driving cars. . . productivity really matters to us, and the maturity of this ecosystem is really, really helpful,” he said of working with Nvidia and its ecosystem of engineers and vendors.

Another problem for China is that local manufacturing is not an option for the more advanced chips used by self-driving platforms. Foreign incumbents are also consolidating their dominance.

TSMC, the biggest processor chip maker, expects a capital expenditure of $44 billion this year alone, which will increase it by almost half. In contrast, China’s closest rival, the minimum wage, is planning an investment of $5 billion. Most industry insiders estimate that SMIC lags about five years behind TSMC in technology development.

“At the end of the day, your car has to work. It must be delivered on a large scale, in quality, in volume, at cost. You can’t pretend to get around it. Your propaganda only works so far,” the consultant said.

Additional reporting by Eleanor Olcott in London and Richard Waters in San Francisco

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