Internet & Tech

Filling the gap

SemiDrive challenges NXP in automotive chip market


China’s newest unicorn

When Qualcomm tried to purchase Holland’s NXP for $44 billion in 2016, the world’s largest smartphone chipmaker was hoping to get its hands on one of the leading lights in the automotive chip market.

The deal foundered two years later after the Chinese government refused to give regulatory approvals.

But the proposed acquisition also  spurred two of NXP’s most senior Chinese executives – Maggie Qiu and Zhang Qiang – to set up on their own.

Nanjing SemiDrive, the company they created, went on to secure unicorn status late last year after pulling in Rmb1 billion ($150 million) in its Series B funding round.

Qiu recently told a Weixin blogger that she realised there was an opportunity for a newcomer in China because the “continuous mergers and reorganisations from the chip giants meant they could no longer rapidly respond to the needs of the domestic auto market”.

Over the past two years, the semiconductor firms haven’t been capable of meeting market demand for chips either, after miscalculating on how long Covid-19 would crimp demand for new vehicles, particularly of the electric variety (which require an ever-larger number of semiconductors).

Sales have been stronger than the chip firms had expected and one of the biggest shortages is reported in microcontrollers (MCUs), which handle different automated processes such as braking and adaptive cruise control in the electronic advanced driver-assistance systems (ADAS) that support driving and parking.

The industry-wide shortages aren’t expected to come under better control until the middle of 2023 at the earliest. A recent survey by American electronics components distributor Avnet concluded that automakers have been suffering delays of up to 50 weeks in getting the necessary MCU chips. This has provided SemiDrive with another commercial opportunity, although as Zhang tells another commentator on Chinese social media, its emergence is being closely watched by the global chip giants that control 75% of that market: Renesas, NXP, Infineon, STMicro and Microchip.

Zhang says that one Chinese carmaker had signed a contract with SemiDrive after its existing supplier ran out of stock. On learning of the new tie-up, the foreign supplier immediately guaranteed delivery to the customer, however, “if they cancelled the order to SemiDrive”.

Zhang offered the story in demonstration of the opportunities – and the opposition from competitors – in the sector. SemiDrive is also trying to make up ground on its rivals with the launch of its first microcontroller: the E3 series. The chip, which debuted in April,  adds to  the company’s existing chip range for smart cockpits, general gateways and ADAS platforms. Running at a frequency of 800MHz, the chip will go into mass production in the third quarter of this year, the company says.

© ChinTell Ltd. All rights reserved.

Sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.