China is urging the country’s top carmakers to source up to a quarter of their chips locally by 2025, as the world’s biggest automotive market looks to build a semiconductor supply chain amid escalating tensions with the US, reports the Financial Times. The Ministry of Industry and Information Technology has asked carmakers including SAIC Motor, BYD, Dongfeng Motor, GAC Motor and FAW Group to increase their local procurement of automotive-related chips to 20-25% by next year, according to people briefed on the matter, with an eventual goal of increasing the ratio well beyond the initial target.
More than 30 million cars are sold in China each year, about a third of global sales, but local automotive chip supplies are only about 10%.
The government-led local procurement guidelines are not mandatory so far, people with knowledge of the matter said. Instead, an award or credit system will encourage domestic carmakers to adhere to the national policy. The 20-25% goal refers to both the number of chips per car and their share of the total procurement value.