The automotive semiconductor industry in China is experiencing significant changes due to the country's efforts to localize production.

Localization of Production

Chinese original equipment manufacturers (OEMs) are increasingly incorporating domestic semiconductor content, leading to a rise in their market share.

The impact on global semiconductor suppliers is expected to be manageable, with a projected share loss of around 7% by 2028.

Growth in Electric Vehicle Market

Established players in the market are expected to maintain mid-single-digit revenue growth rates, driven by the growing electric vehicle (EV) market.

The short and medium-term risks posed by the rise of Chinese semiconductor content are considered controllable, with a projected 2-5% annual decline for global incumbents.

Competitive Landscape

The existing installed base of automotive models in China provides a buffer against market share losses.

Incumbent suppliers are aware of the competitive landscape and focus on higher-end products to maintain a competitive edge.

While disruption is primarily occurring in lower-end product segments, there is recognition that this trend may extend to higher-end products over time.

The Future of the Industry

The interplay between localization efforts and the strategies of global incumbents will shape the future of the industry.