GM’s China Venture Is Developing Its Own Microchips, Report Says

What’s new: A Chinese joint venture of General Motors Co. has revealed that it has been developing its own automotive microchips since 2018, according to Reuters.

The disclosure, which took place at an industry conference Wednesday, shows how automakers are grappling with supply chain disruptions caused by a global shortage of semiconductors.

Without making it clear whether it is merely designing its chips or is also participating in manufacturing, SAIC-GM-Wuling Automobile Co. Ltd. (SGMW) said that it will deepen ties with Chinese manufacturers to improve the quality and cost effectiveness of its chips, Reuters reported.

SGMW, a joint venture of GM, SAIC Motor Corp. Ltd. and Guangxi Automobile Group Co. Ltd, also said that it will use more chips made in China over the next five years.

The background: Facing tightening U.S. tech export rules, China aims to produce 70% of its semiconductors domestically by 2025 as part of its broader plans to attain global leadership in manufacturing in high-tech industries including artificial intelligence, information technology and big data analytics.

In 2020, sales of integrated circuits in China jumped 9% year-on-year to $143 billion, but only about 5.9% of the total went to indigenous companies, according to a report released in February by market research firm IC Insights.

Quick Takes are condensed versions of China-related stories for fast news you can use.

Contact reporter Ding Yi (yiding@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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