top of page

China's EV Industry Faces Challenge Of Chip Shortage

Updated: Jan 3

[Edited] Investment experts at a venture capital conference have highlighted the challenge faced by China's booming electric vehicle (EV) industry in accessing advanced chips.

China EV
Credit: AFP

The country's heavy reliance on the West, particularly the United States, for high-end chips could pose a significant obstacle in the future. Yuan Bing, co-founder of Rockets Capital, stated that the chip front is the biggest challenge for the EV industry, emphasizing the need for China to catch up in this crucial area.

Due to US trade sanctions, China currently lacks access to advanced chips used in the latest smartphones and laptops. While the country has a strong base of chip producers for present-day cars, the next generation of EVs will require more advanced chips. A petrol-powered car typically requires around 200 chips, whereas an EV needs over 1,000 chips on average. Chinese carmakers are increasing in-house production, and third-party suppliers like Horizon Robotics and Black Sesame have also entered the market.

Ian Zhu, managing partner at Nio Capital, highlighted a key advantage that Chinese players have over their Western counterparts - their proximity to customers. Zhu stated that many chips will be redesigned, and Chinese companies are in a better position to receive specifications directly from carmakers. Additionally, auto chips are not currently subject to the same level of sensitivity as other chip areas.

While China faces challenges in advanced chip production, it has made progress in other areas of EV technology. For instance, China has shown advancements in lidar (light detection and ranging) applications, particularly in precision mapping. Lidar sensors are crucial for developing fully autonomous driving capabilities. However, the high research and development costs associated with lidar technology remain a challenge for many companies.

Hesai Group, a Shanghai-based sensor maker for smart cars, reported a significant increase in revenue but also a net loss due to rising research and development costs. Despite this, Yuan Bing expressed confidence that China's lidar sensor firms will scale up and become profitable in the coming years, leading the industry.

In light of concerns about state involvement and subsidies in China's crowded EV industry, Zhu called on global investors to reduce their worries. He argued that the current market leaders are companies that are meeting consumer needs and should be seen as reliable investment opportunities.

  • China's EV industry faces a challenge in accessing advanced chips due to US trade sanctions.

  • Chinese carmakers are increasing in-house chip production, and third-party suppliers have entered the market.

  • Chinese players have an advantage in receiving specifications directly from carmakers.

Source: SCMP

As technology advances and has a greater impact on our lives than ever before, being informed is the only way to keep up.  Through our product reviews and news articles, we want to be able to aid our readers in doing so. All of our reviews are carefully written, offer unique insights and critiques, and provide trustworthy recommendations. Our news stories are sourced from trustworthy sources, fact-checked by our team, and presented with the help of AI to make them easier to comprehend for our readers. If you notice any errors in our product reviews or news stories, please email us at  Your input will be important in ensuring that our articles are accurate for all of our readers.

bottom of page