On December 16, Gree Electric Chairwoman Ming-zhu Dong told Sina Finance CEO Qing-xu Deng, "Gree's chips have succeeded. We have achieved everything from independent research and design to manufacturing and a complete semiconductor value chain," according to ICSmart.
Dong further shared with Sina that Gree has independently developed chip research, design, and manufacturing capabilities without any government funding. She noted, "What makes me happiest is that I built this chip factory without taking a single penny from the state," though she did not elaborate on the specific chips the company produces.
Gree's independent R&D efforts have resulted in nearly 200 million cumulative chip shipments, widely used in air conditioning and industrial automation, according to The Paper.
In March, Dong announced that Gree's SiC chip factory, set to begin production by June, would become the world's second-largest and Asia's largest fully automated compound semiconductor facility. With over 70% domestically sourced equipment and chips boasting a defect rate below 10 ppm, the factory highlights the reliability of China's semiconductor manufacturing, according to CCTV-2 and 163.com.
Chinese manufacturers like Xiaomi and Midea have recently entered chip development as well to boost self-reliance and supply chain resilience, according to Hk.investing.com.
Gree's chipmaking journey: investments and independent R&D
Gree entered the semiconductor sector in 2012, establishing China's first domestic IPM production line. In 2018, it founded Edgeless Semiconductor in Zhuhai to develop home appliance control and power chips and became Wingtech Technology's second-largest shareholder, holding over 10% of its shares.
In 2019, Gree pledged CNY50 billion (approx. US$6.88 billion) for chip R&D, growing annual shipments from 10 million in 2019 to over 100 million by 2022. By 2024, cumulative shipments from Edgeless Semiconductor are expected to reach 200 million units.
From 2020 to 2022, Gree introduced chips for air conditioners, smartphones, and IoT devices, covering control, driver, sensor, and communication applications. In 2022, it established Zhuhai Gree Electronic Components and built a chip manufacturing facility in just 388 days, incorporating AI and automated defect detection for greater efficiency.
In 2023, Gree Electronic Components gained environmental approval to expand with three new facilities, boosting annual capacity to 240,000 6-inch SiC wafers. That year, its chip business generated CNY10 billion in revenue (up 50% year-over-year) and CNY2 billion in net profit (up 100%), contributing 4% of revenue and 7% of profit, far surpassing the growth of its air conditioning segment, per Baidu News.
Gree's chip series and power semiconductors
Edgeless Semiconductor offers industrial-grade 32-bit MCUs, AIoT SoCs for smart homes, and power semiconductors, applied across smart air conditioners, commercial HVAC systems, consumer electronics, wearables, healthcare, and industrial automation, per the company website and cnBeta.
Gree's mid-year report highlighted that its 32-bit MCUs annual usage exceeded 30 million units. The chips boast a defect rate of just 15 ppm or 1.5 defective units per 100,000.
Gree's AIoT SoC chips, equipped with NPUs, enhance computing power for tasks like voice recognition and machine vision. Integrated with energy-saving algorithms for air conditioners, they have passed mass-production validation, achieving over 15% energy savings.
Gree's power semiconductors, including IGBTs for high-voltage switching and FRDs for reverse voltage recovery, are used in variable-frequency air conditioners, with annual usage exceeding 20 million units. Its third-generation devices have passed mass-production validation, enhancing energy efficiency in residential air conditioners.
From chipmaking to full value chain integration
Dong stated in a November livestream with New Oriental CEO Michael Yu that Gree's self-funded chip development aims to solve critical bottlenecks. The company has also invested in and partnered with leading semiconductor firms to enhance its value chain, according to Sina.
In 2018, Gree co-founded Coresing Semiconductor Technology with partners like Zhuzhou CRRC Times Electric and Changan Automobile to focus on power semiconductor technologies such as IGBT, SiC, and GaN, expanding its value chain through R&D and partnerships.
In 2019, Gree invested CNY2 billion for a 4.76% stake in Sanan Optoelectronics, enhancing its semiconductor expertise. In 2023, it partnered with China Fortune-Tech Capital to establish a GaAs wafer foundry in Zhuhai, investing CNY3.4 billion with a monthly capacity of 15,000 wafers.
In 2024, Gree invested nearly CNY10 billion in a 200,000-square-meter SiC chip factory with integrated manufacturing and packaging, bolstering its competitiveness in high-performance semiconductors. It also invested in semiconductor funds like Zhengzhou Qinghe Pan-Semiconductor and Guangdong-Macao.
According to ICSmart, the semiconductor sector is known for its high costs, long cycles, and significant risks. Despite limited prior expertise, Gree entered the field driven by its substantial chip demand, raising investor concerns.
However, amid the ZTE incident and US-China tech tensions, independent R&D and domestic chip production became critical. Dong stated that Gree's chip development aims to overcome key technical bottlenecks, with plans to invest CNY30–50 billion over three years to master advanced chip technologies and ensure self-reliance, aligning with China's broader semiconductor ambitions.
Gree's diversification woes: can chips turn things around?
Tencent identifies four challenges for Gree: pressure on its air conditioning business, poor performance in other appliances, failed diversification attempts, and investor skepticism about its strategy.
Gree's 2024 first-three-quarter revenue dropped 5.39% year-over-year to CNY147.4 billion, despite a 9.3% rise in net profit. October air conditioning shipments fell 1.89%, the only decline in the industry. Gree also lags behind Midea and Haier in appliance market share, due to misaligned R&D and sales strategies.
Gree's diversification into refrigerators, smartphones, and EVs has struggled. A beauty device launched this year sold just three units on JD.com in four months, signaling poor market acceptance.
Investors criticize Gree's diversification strategy for lacking competitiveness, with Dong's leadership failing to boost confidence. The company's weak stock performance underscores concerns about its transformation.
