Nvidia reveals progress in China’s self-driving chip market, setting up competition with domestic players

Nvidia, the US chip maker banned by Washington from selling its most advanced semiconductors to China, has revealed solid progress in the mainland’s electric vehicle (EV) market with its self-driving technology.

Nvidia said at the CES consumer electronics show in Las Vegas that Chinese EV makers, including Great Wall Motors, Li Auto, Xiaomi, and Geely-backed ZEEKR, have snapped up its Drive Thor autonomous driving system to enhance performance of their vehicles. This sets up increased competition with local self-driving system providers such as Huawei Technologies.

As of June last year, Nvidia – which is unable to ship its advanced AI chips to China due to US trade sanctions – had about a 52 per cent share of the global navigate-on-autopilot (NOA) market and cooperation agreements with 25 automotive original equipment makers globally, according to data from Gasgoo Institute, a Shanghai-based research company.

“Nvidia remains predominant in terms of smart-driving chips in China,” said Brady Wang, an associate director with research firm Counterpoint. “But competition between Chinese manufacturers and foreign companies is set to intensify as they compete for a slice of the autonomous driving segment in China’s EV market.”

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Chinese EV makers have been big buyers of Nvidia auto chips. For example, Nio’s flagship sedans ET5 and ES7, Li Auto’s L9 model and Xpeng’s G9 vehicle all come equipped with Nvidia’s Orin chips. Automotive chips are seen as a less sensitive area of the semiconductor market by US authorities when it comes to setting trade sanctions.

In 2022, China sold about 7 million units of smart passenger vehicles equipped with assisted autonomous driving systems, which translates into a market penetration rate of 35 per cent. In the first half of this year, the market penetration rate rose to almost 43 per cent, according to data from China’s Ministry of Industry and Information Technology (MIIT).

The MIIT in November issued a new policy that encourages EV makers to bring vehicles equipped with high-levels of autonomous driving to Chinese roads, in a major effort to accomplish Chinese President Xi Jinping’s vision of building a strong and modern transport network.

Thanks to policy stimulus, Chinese autonomous driving system solution providers – including Horizon Robotics and Black Sesame Technologies – have stepped up their game and are set for greater competition with the likes of Nvidia, Qualcomm, and Intel-owned MobileEye in areas such as autonomous driving chips and full-stack smart car solutions.

Nvidia topped China’s NOA computing solutions market with a share of 53 per cent in the first half of 2023, followed by smart mobility start-up Horizon Robotics with 31 per cent, and Texas Instruments with 9 per cent, according to data from the Gaogong Industry Research Institute (GGII), which tracks nascent industries in China such as EVs and batteries. Huawei and MobileEye ranked in equal 4th place with a 4 per cent market share each.

Huawei has emerged as a leading player due to its experience in auto chip design and hardware systems after it set up a smart car solution unit in 2019, the year it was added to a US trade blacklist. Under these sanctions, Huawei could not buy most US-origin semiconductors and had to rely on its own smart-driving chips.

Priot to the 2023 Shanghai Auto Show in April, Huawei launched its own home-grown smart driving platform, called advanced driving system 2.0 (ADS) and powered by a Huawei-made chipset MDC 610, according to a report by research company Counterpoint and a note in July by Kaiyuan Securities.

Despite still being in the red, the firm’s car unit achieved sales of 2.1 billion yuan (US$305 million) in 2022 and 1 billion yuan in revenue in the first half of this year, according to company information.