China is one of the world's largest automobile markets, and in recent years, it has made no secret of its ambition in promoting the transformation of the automotive industry towards electrification and intelligence. This is not only an increase in quantity, but also a qualitative leap. From government support policies to active investment from local enterprises, it all shows that the current situation and development trend of the Chinese market are in an unprecedented period of activity.

This article will take you to explore in detail the current market situation and future trends of China's automotive semiconductor industry, to see what opportunities we can capture and what challenges we will face.

When it comes to the current situation of China's automotive semiconductor market, it can be summarized in four words: increasingly prosperous. As the world's largest automotive market, China has a huge demand for automotive chips.

According to relevant data, the size of China's automotive chip market has been expanding year by year, reaching $15.01 billion in 2021 and $16.75 billion in 2022. Especially in the field of new energy vehicles, the demand for high-performance and highly reliable semiconductors in electric vehicles, plug-in hybrid vehicles and other types of vehicles is driving the prosperity of the entire market.

However, although our market is good, we still have to face fluctuations in the global supply chain. From the global pandemic that began two years ago to the ongoing geopolitical disputes this year, the global semiconductor supply chain has been in turmoil. For the Chinese automotive industry, which heavily relies on imported semiconductors, this is not just a severe test.

Especially in the supply of certain key technologies and core chips, domestic enterprises still find it difficult to be completely self-sufficient. For example, high-end automotive microcontrollers (MCUs), advanced sensors, and power semiconductors often rely on imports as their core components.

But on the other hand, challenges and opportunities always coexist. The fluctuations in the global supply chain have actually stimulated China's emphasis on independent semiconductor research and development and production capacity from policy to enterprise level. From the 14th Five Year Plan to industrial support from local governments, from the popularity of the capital market to technological breakthroughs in research institutions, a series of actions are accelerating the process of China's automotive semiconductor industry's independence.

In fact, facing the challenges of global supply chains, the Chinese market has shown unique resilience and vitality. Many domestic enterprises have begun to narrow the gap with international advanced levels and enhance their competitiveness in the global semiconductor industry chain through mergers and acquisitions, technological cooperation, and increased research and development investment.

So, although the fluctuations in the global supply chain have brought significant challenges to the Chinese automotive semiconductor market, they have also given rise to more opportunities for independent innovation and development. This market is experiencing a growth intertwined with pain and joy.

Throughout the tremendous changes in the global automotive industry, we have seen three driving factors in the Chinese market: the growth of new energy vehicles, the advancement of intelligent driving technology, and strong support from national policies.

In China, with the increasing awareness of environmental protection and the adjustment of energy structure, new energy vehicles are entering a golden development period. The government's preferential policies such as purchasing subsidies and road use rights for new energy vehicles have greatly promoted consumers' desire to purchase. As a result, the demand for key semiconductor components such as IGBT, MCU, and sensors in these high-tech vehicles has sharply increased.

In addition, with the continuous maturity of artificial intelligence, big data and other technologies, autonomous vehicle above L2 level are gradually moving from theory to market. The implementation of these technologies all relies on a large number of high-performance semiconductor chips, such as high-speed processors, high-precision sensors, etc. The development of intelligent driving technology has directly driven the demand for automotive semiconductors.

Finally, the support of national policies and domestic substitution strategies are another important factor driven by the market. The emphasis on the semiconductor industry at the national level is evident, aimed at reducing external dependence and improving the security and stability of the domestic supply chain. The support of policies is not only reflected in fiscal subsidies, but also in market access, research and development investment, and other aspects. At the same time, the strategy of domestic substitution further increases the market share of local enterprises and motivates them to increase technological innovation, improve product quality and competitiveness.

These three carriages mutually promote and cause and effect each other, jointly driving the vigorous development of China's automotive semiconductor market. Despite the uncertainty of the global supply chain, the development prospects of the market are still promising under these powerful internal driving forces.

At present, the global automotive chip market is baSICally monopolized by international semiconductor giants, and data shows that the top five manufacturers account for nearly 50%. Among them, Infineon has the highest market share of 12.7%, followed by NXP, Renesas, Texas Instruments, and STMicroelectronics. Among the top 20 global automotive semiconductor companies, only one is a Chinese company - Ansei Semiconductor. We need to take a share of these international semiconductor giants in terms of technological innovation, international competitiveness, intellectual property protection, and supply chain security, all of which are urgent issues that need to be addressed in China's automotive semiconductor industry.

Firstly, the pressure of technological innovation and independent research and development is increasing day by day. Although there is a huge demand for semiconductors in the domestic market, technological innovation capability remains a bottleneck that restricts the development of the industry. The design and manufacturing technology of high-end automotive semiconductors is complex, and the threshold for independent research and development is high, requiring a large amount of capital and time investment. How to achieve technological breakthroughs in a short period of time is not only a technical issue, but also a strategic one.

Furthermore, international competition and intellectual property protection are equally challenging. With the increasing activity of Chinese enterprises in the international market, how to maintain their own interests while following international rules has become a daunting task. Especially in terms of intellectual property protection, how to protect independent technologies from infringement on a global scale and ensure that innovative achievements of enterprises can receive reasonable returns is an issue that cannot be ignored in industry development.

Finally, supply chain security issues are particularly prominent. Currently, the instability of the global political and economic situation poses a threat to the semiconductor supply chain. The tense trade relations between China and the United States, geopolitical changes, and even the resurgence of global epidemics may have an impact on the supply chain. How to build a stable and reliable supply chain system on a global scale, ensuring the continuous supply of key raw materials and components, is a practical challenge that the Chinese automotive semiconductor industry must face.

Faced with challenges, the Chinese automotive semiconductor industry is also nurturing infinite development opportunities. The rise of local enterprises, deepening international cooperation, and mastery of upstream materials and core technologies are all highlights of the current industry development.

Local enterprises are facing unprecedented market opportunities. With the tilt of national policies and the increase in market demand, domestic manufacturers have greater development space. Automobile manufacturers are increasing their support for local semiconductor companies, which not only helps to reduce costs but also shortens the supply chain, improving its responsiveness and flexibility. In addition, local enterprises have been deeply involved in the market for many years, and have a deeper understanding of the consumption habits and demand changes in the domestic market, which also provides them with the possibility of customized solutions.

International cooperation and technology introduction provide Chinese enterprises with a fast way to improve their technological level. Through cooperation with international leading enterprises, Chinese semiconductor companies can not only introduce advanced technology and management experience, but also leverage the power of international partners to jointly explore domestic and foreign markets. The deepening of international cooperation helps Chinese enterprises better integrate into the global value chain and enhance the international competitiveness of products and services.

Finally, the extension of upstream materials and core technologies is the key to enhancing the strength of China's automotive semiconductor industry. The construction of a complete industrial chain, from the production of silicon materials to the design and packaging of chips, and ultimately to the development of applications, is an important step in improving industry competitiveness. In addition, focusing on and investing in the research and development of core technologies, such as improving the efficiency of IGBT or improving the performance of MCU, will help enterprises gain an advantage in competition and ultimately achieve comprehensive autonomy and controllability in the semiconductor industry.

For ordinary industry practitioners, maintaining a learning attitude, embracing change, and actively exploring new technologies will be the key to career development. In summary, the future of China's automotive semiconductor industry is bright, but light does not come naturally, but requires the joint efforts of each and every one of us.

Through continuous technological innovation, strengthened international cooperation, deep cultivation of the local market, and continuous optimization of supply chain management, the Chinese automotive semiconductor industry is sure to maintain a stable position in global industry competition.

Let's hope together that this industry can seize opportunities, embrace challenges, and create a more brilliant future.