Chinese auto chip startup Horizon Robotics on Monday announced that it has secured a new round of funding from state-owned automaker FAW Group, the latest example of local automakers upping their investment in the domestic semiconductor sector to cope with a prolonged global chip shortage.

Why it matters: The investment reflects Chinese automakers’ growing anxiety about the ongoing semiconductor constraints that have crippled them for more than a year and show no signs of abating amid recent Covid-19 outbreaks in the country.

New money influx: Horizon Robotics plans to use the proceeds to speed up the development of new auto chips for artificial intelligence computing and its software development, the company said in an announcement (in Chinese) on Monday. The funding amount remains undisclosed.

  • Founded by Yu Kai, a former head of Baidu’s artificial intelligence unit, the seven-year-old startup said that the company’s Journey chips, which could enable rapid processing with vehicles’ advanced driver assistance systems, have shipped more than 1 million units as of last year.
  • The company added that it has formed partnerships with more than 20 car manufacturers, including SAIC and Changan, making it the country’s largest producer of automotive-grade AI chips. Its existing investors include SAIC, BYD, and GAC Capital, the venture capital unit of the namesake automaker.

Persistent chip shortages: Last year, China only made 5% of the auto chips it consumed, according to figures published by US research company IC Insights and obtained by Caixin (in Chinese). Chinese automakers’ production has been hit by the low self-sufficiency in auto chips and an ongoing chip shortage, creating more demand for building more domestic auto chip firms to fill in the growing demand. 

  • GAC is among a string of automakers being hit by ongoing supply chain issues, with production cut by 160,000 vehicles, equivalent to RMB 20 billion ($2.98 billion), in the first half of this year, chairman Zeng Qinghong said on June 25 at a semiconductor conference in Guangzhou.
  • GAC, Toyota’s manufacturing partner in China, expects chip shortages will continue into 2024 and is thus looking for home-produced substitutes to ensure supply. The Guangzhou-based automaker has also invested in local chip foundry CanSemi to develop microchips for future vehicle models on 12-inch wafers.
  • GAC is not alone. At the same conference, Bosch China’s president Chen Yudong called for more investment to increase domestic production of semiconductors in the country, estimating that production in China has fallen by 1 million vehicles during the first six months of 2022 because of supply issues.
  • Struggling to recover from a lengthy Covid lockdown affecting several of its China plants, Bosch currently meets around one-third of the total demand for its car parts in the country but expects an improvement from July when it thinks supply could meet 60% at most of the market demand.

Context: China has for years been building an independent domestic chip supply chain, reporting a 33.3% year-on-year increase in domestic output of integrated circuits (ICs) last year, according to data released by China’s National Bureau of Statistics.

  • The central government recently promised to take more measures to help domestic makers expand capacity and boost innovation, China Securities Journal reported Tuesday, citing Guo Shougang, a deputy director at the Ministry of Industry and Information Technology.

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: or Twitter: @jill_shen_sh