China’s drive to reduce its technological reliance on the U.S. is gathering pace. The country has urged its electric vehicle producers to increasingly opt for domestically produced chips.
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According to Bloomberg, China’s Ministry of Industry and Information Technology is encouraging its EV players to procure around a fifth of their chips domestically by 2025. Chinese EV firms such as XPeng (NYSE:XPEV), Li Auto (NASDAQ:LI), and BYD (OTC:BYDDF) are increasingly establishing their presence in domestic and international markets. This focus on the domestic market could lead overseas chip producers to consider manufacturing their products within China to maintain their market presence. The development could impact leading chip providers such as Nvidia (NASDAQ:NVDA) and Texas Instruments (NASDAQ:TXN).
Escalating China-U.S. Tensions
Tensions between China and the U.S. have been escalating, as the U.S. aims to tighten its technology restrictions on China. In retaliation, China is establishing a massive $27 billion chip fund. Recently, the U.S. House of Representatives passed a bill concerning TikTok, leading to accusations from China that the U.S. is stifling rules-based competition.
Who Are the Top EV Makers in China?
Shares of Li Auto, XPeng, and BYD have ticked higher over the past year. While China’s macroeconomic landscape still remains fragile, analysts foresee major upside potential for these three EV names over the coming periods.
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