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Chinese automakers and chip companies are accelerating efforts to replace products from Nvidia (NASDAQ:NVDA) and other foreign chip leaders in automotive applications, fearing that further U.S. export restrictions could derail the development of self-driving and related technologies.
Xpeng (NYSE:XPEV) and Nio (NYSE:NIO), two emerging car companies supplied by Nvidia, are reducing their reliance on the U.S. AI titan by developing their chips for smart driving, Nikkei Asia reported on Wednesday.
In their latest models, Xpeng used its in-house Turing chip, while Nio deployed its Shenji NX9031 chip.
Also Read: Xpeng Says Its New Self-Driving Chip Is 3x More Powerful Than Nvidia’s, Will Power VW Cars
A June report indicated Chinese automakers are rapidly moving to ditch Nvidia and other foreign chip suppliers, aiming to eliminate imported semiconductors from their vehicles by 2027. At least two brands plan to mass-produce cars using 100% domestically made chips by 2026.
Major players including SAIC Motor, BYD (OTC:BYDDY), Geely (OTC:GELYY), Great Wall Motor (OTC:GWLLY), Li Auto (NASDAQ:LI), and Changan are actively developing models powered entirely by homegrown semiconductors, according to sources cited by Nikkei Asia.
Driving the shift, China’s Ministry of Industry and Information Technology is overseeing the transition by requiring automakers to conduct regular self-assessments of domestic chip usage.
The momentum follows Nvidia’s announcement that it will exclude China from future revenue forecasts after losing $2.5 billion in first-quarter sales due to U.S. export controls.
Prior reports also indicated China is pushing forward with Nvidia’s B40 project despite U.S. export restrictions, even as Nvidia denies re-entering the Chinese market with a new AI chip.
Reportedly, 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.
Meanwhile, Nvidia maintains it has not finalized any product for China, stating, “Until we settle on a new product design and receive approval from the U.S. government, we are effectively foreclosed from China’s $50 billion data center market.”
The tensions follow Nvidia’s withdrawal of its Hopper chips from China due to U.S. export bans, which forced the company to write off $5.5 billion in inventory and forgo around $15 billion in potential sales.
Price Actions: XPEV is trading higher by 1.66% to $19.61 premarket at last check Wednesday. NIO is up 3.33%.
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