Germany’s Volkswagen announced plans to develop an in-house assisted driving chip for its business in China. The move aims to counter falling sales in the world’s largest auto market and reduce reliance on global semiconductor supply chains.
Volkswagen remains the leading foreign automaker in China, but local brands are rapidly gaining ground. To recover, the company is accelerating its “In China, for China” strategy. It aims to move beyond local production and gain control over key mobility technologies.
Ralf Brandstatter, CEO of Volkswagen Group China, said in a news release on Wednesday:
“We are accelerating and deepening the implementation of our ‘In China, for China’ strategy — moving beyond localised production to mastering the core technologies that shape tomorrow’s mobility.”
For the first time, Volkswagen will design and produce its own in-house assisted driving chip. The project will be managed by a joint venture between CARIAD, Volkswagen’s software arm, and Horizon Robotics, a leading Chinese tech company.
The chip is expected to be ready within three to five years, according to the company’s statement.
Smart driving features have become a major competitive factor in China’s fast-evolving automotive market. At the same time, semiconductors have turned into a focal point of global trade tensions, especially between the United States and China.
Washington continues to tighten export controls on advanced chips and digital infrastructure. Meanwhile, European automakers are also facing challenges due to the China-Netherlands dispute over Nexperia chips, which are crucial for vehicle electronics.
Volkswagen CEO Oliver Blume said that the initiative aims at “taking control of a key technology that will define the future of intelligent driving”. He added:
This marks the next logical step in our strategy for outstanding long-term innovation capabilities.
Initially, the chip will focus on the Chinese market. However, Volkswagen plans to align future developments with its global roadmap and share China’s technological achievements across its worldwide operations.