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Chinese automakers Xpeng and Nio are accelerating efforts to replace Nvidia chips with domestic alternatives, fearing US export restrictions could impact self-driving and related technologies. Xpeng used its Turing chip in its latest models, while Nio deployed its Shenji NX9031 chip. Other major players, including SAIC Motor, BYD, Geely, and Great Wall Motor, are also actively developing models powered by homegrown semiconductors.

Chinese automakers Xpeng and Nio are accelerating efforts to replace Nvidia chips with domestic alternatives, fearing that US export restrictions could impact self-driving and related technologies. Xpeng used its in-house Turing chip in its latest models, while Nio deployed its Shenji NX9031 chip. Other major players, including SAIC Motor, BYD, Geely, and Great Wall Motor, are also actively developing models powered by homegrown semiconductors.

China aims to cut all foreign auto chip use by 2027, with top brands planning mass production using 100% domestic chips by 2026 [2]. This push is driven by concerns over the potential impact of US export restrictions on the development of self-driving and other advanced automotive technologies.

The shift follows Nvidia’s announcement that it will exclude China from future revenue forecasts after losing $2.5 billion in first-quarter sales due to US export controls [1]. Nvidia’s withdrawal of its Hopper chips from China due to US export bans has forced the company to write off $5.5 billion in inventory and forgo around $15 billion in potential sales [1].

Despite Nvidia’s denial of re-entering the Chinese market with a new AI chip, Shenzhen-based supplier ZJK Industrial is ramping production for the B40, a custom AI accelerator based on Nvidia’s Blackwell architecture tailored for China. ZJK expects to begin mass production in June and ship over 1 million units by the end of 2025 [1].

The tensions between China and Nvidia highlight the broader trend of Chinese automakers and chip companies accelerating efforts to replace foreign chip leaders. This shift is being overseen by China’s Ministry of Industry and Information Technology, which requires automakers to conduct regular self-assessments of domestic chip usage [1].

The market reaction to these developments has been mixed. Xpeng (XPEV) is trading higher by 1.66% to $19.61 premarket at last check Wednesday, while Nio (NIO) is up 3.33% [2].

References:
[1] https://asia.nikkei.com/business/technology/tech-asia/china-s-automakers-speed-up-efforts-to-replace-nvidia-chips
[2] https://www.benzinga.com/markets/tech/25/08/46896066/nio-xpeng-lead-chinas-push-to-ditch-nvidia-chips