As the political tension between China and the US continues, the Chinese government is enhancing the country's EV supply chain to avoid battery technology outflow and learn critical techniques from foreign companies.
Japan-based Yomiuri reported that the Chinese government asked local EV companies to source chips and other electronics domestically. The government will establish a scheme to verify their procurement. The move was seen as the country's effort to set up a self-sufficient EV supply chain covering raw materials to vehicle production.
According to China-based research firms, the country's automotive component market value was about CNY3.88 trillion (US$534 billion) in 2022. The value is expected to reach CNY4.8 trillion in 2028.
The Chinese automotive industry currently uses parts primarily from European, US and Japanese suppliers. China-based companies are learning techniques through their joint ventures with foreign partners and improving their capability of producing components. The goal is to eliminate the reliance on supply chains outside China.
The Chinese government has also closely monitored the EV battery segment. According to sources from China, the country's Ministry of Industry and Information Technology asked battery maker CATL to establish 100%-owned subsidiaries when investing overseas to avoid technology outflow. CATL has been constructing plants in Germany, Hungary and Indonesia since 2019.
Japanese media reported that a Japanese company sold its shares in a China-based EV maker under the pressure of the Chinese government.
In addition to EVs and batteries, China also intends to ban rare earth alloy exports. According to Nikkei, China's Ministry of Commerce and Ministry of Science and Technology released a list of items banned or restricted from export at the end of 2022. The list includes 43 additional and revised items, including those for rare earth alloy refining and processing. For example, the high-performance magnet used in electric motors requires rare earth alloy to produce. The technique for making the alloy was one of the items banned or restricted from export. The list will become effective in 2023 at the earliest.
China also tries to build a more comprehensive semiconductor supply chain. Due to the export restriction on advanced semiconductor techniques and equipment imposed by the US, Japan and the Netherlands, China has focused on developing chips made on mature process. The country has invested many resources in semiconductor equipment to increase the self-production rate.
China has made progress in chips made on advanced process. Huawei's newly launched smartphone, Mate 60 Pro, uses Kirin 9000s, likely a 7nm technology chip produced by SMIC through multi-exposure using DUV lithography machines.
According to Chinese media reports, over 90% of suppliers for the Mate 60 Pro are based in China.