China's electric car race is becoming more about chip prowess as companies focus on tech

cnbc.com:

BEIJING — Chinese electric car companies that are already engaged in an intense price war are turning up the heat on another front: Chip-powered tech features such as the driver-assist function.

Nio and Xpeng have announced that their in-house designed auto chips are ready for production. So far, many of the major Chinese electric car makers have relied on Nvidia chips, with the company's automotive chips business over the past few years bringing in more than $300 million in revenue a quarter.

«It's hard to point to your product being superior when your competitors use the exact same silicon to power their infotainment and intelligent driving systems,» said Tu Le, founder of consulting firm Sino Auto Insights, explaining why EV makers are turning to in-house chips.

Le said he expected Tesla and Chinese electric car startups to compete on designing their own chips, while traditional automakers will likely still rely on Nvidia and Qualcomm «for the foreseeable future.»

Nvidia reported a 37% year-on-year increase in automotive segment revenue to $346 million in the latest quarter.

«Automotive was a key growth driver for the quarter as every auto maker developing autonomous vehicle technology is using NVIDIA in their Data Centers,» company management said on an earnings call, according to a FactSet transcript.

«I think the main reason why Chinese [automakers] pay attention [to] self-development system-on-chip is the success of Tesla in full-self driving,» said Alvin Liu, a Shanghai-based senior analyst for Canalys.

In 2019, Tesla reportedly shifted from Nvidia to its own chip for advanced driver-assist functions.

By designing their own chips, Chinese automakers can customize features, as well as reduce supply chain risk from