The United States believes that China’s substantial state subsidies and excess production capacity allow Chinese products to penetrate the European and American markets at low costs.

TrendForce Insights:

1. Impact of Tariff Increase on Chinese Electric Car Imports in the US Market Is Minimal

According to sales statistics from the first quarter of 2023 to the first quarter of 2024 in the US electric car market, only Geely, among the Chinese electric car groups actively operating in the US market, holds a market share of merely 2%.

By the first quarter of 2024, this share had further declined to just 1%. In fact, Chinese automakers, anticipating such measures, have already shifted their focus away from the US market to regions such as Europe, Southeast Asia, Latin America, and Russia. Therefore, the current increase in tariffs is expected to have minimal impact on China’s new energy car industry.

2. Consumers Focus on Electric Car Prices, Not Nationality

The affordability of Chinese electric cars stems from China’s long-standing high level of self-sufficiency in the entire electric vehicle supply chain, from complete vehicles to components, especially in the battery sector, which accounts for the highest proportion of total vehicle costs.

Coupled with government subsidy policies aimed at attracting consumers to purchase electric cars and increasing the overall market size, this further enhances the cost advantage of various components.

Additionally, according to data released by Gallup in April 2024, only 36% of people with an annual income below USD 40,000 would seriously consider purchasing an electric car, while those with incomes between USD 40,000 and USD 100,000 or more have a purchase intention of 45-50%.

Therefore, the high cost of electric cars remains the primary reason why consumers are currently unwilling to switch to electric cars, rather than being a matter of the car’s “nationality.”

3. Is the Decoupling Strategy for Electric Vehicles from China a Cure or a Poison?

The US administration’s decision to increase tariffs can protect the US fossil fuel car industry in the short term. With consumers unable to access cheap Chinese electric cars, they may opt for US fossil fuel cars.

While this measure may prolong the life of the US automotive industry chain, it could hinder both US and global carbon reduction goals and reduce the international competitiveness of US car manufacturers in the electric vehicle sector. 

Stellantis CEO Carlos Tavares has stated that increasing tariffs will not truly protect his company, and the only option is to continue fighting. Therefore, while higher tariffs serve as a protective shield for the domestic automotive industry chain, car manufacturers ultimately still need to face the harsh reality of global market competition.

Read more

• [Insights] China’s Position in EV Battery Market to be Shaken as the Mass Production Race of All-Solid-State Battery Industry Speeds up?
• [News] Six Companies, Including BYD and CATL, are Included in the U.S. Procurement Ban List

The low-profile visit was made to secure TSMC’s advanced manufacturing capacity, potentially 2nm process, booked for Apple’s in-house AI-chips, according to the report.

Apple has been collaborating with TSMC for many years on the A-series processors used in iPhones. In recent years, Apple initiated the long-term Apple Silicon project, creating the M-series processors for MacBook and iPad, with Williams playing a key role. Thus, his recent visit to Taiwan has garnered significant industry attention.

Apple did not respond to the rumor. TSMC, on the other hand, has maintained its usual stance, not commenting on market speculations related to specific customers.

According to an earlier report from The Wallstreet Journal, Apple has been working closely with TSMC to design and produce its own AI chips tailored for data centers in the primary stage. It is suggested that Apple’s server chips may focus on executing AI models, particularly in AI inference, rather than AI training, where NVIDIA’s chips currently dominate.

Also, in a bid to seize the AI PC market opportunity, Apple’s new iPad Pro launched in early May has featured its in-house M4 chip. In an earlier report by Wccftech, Apple’s M4 chip adopts TSMC’s N3E process, aligning with Apple’s plans for a major performance upgrade for Mac.

In addition to Apple, with the flourishing of AI applications, TSMC has also reportedly beening working closely with the other two major AI giants, NVIDIA and AMD. It’s reported by the Economic Daily News that they have secured TSMC’s advanced packaging capacity for CoWoS and SoIC packaging through this year and the next, bolstering TSMC’s AI-related business orders.

Read more

• [News] Apple M4 Incoming, Boosting TSMC’s 3nm Production
• [News] Apple Unveiled M4 Chip for AI, Heralding a New Era of AI PC

(Photo credit: TSMC)

According to a report from Nikkei on May 16th, the Chinese government has instructed major local automakers to increase the proportion of domestically-produced automotive chips they procure to 25% by 2025 from 10% currently. The Chinese authorities hope that by raising the procurement ratio of Chinese-made chips, they can accelerate the pace of independence for the country’s semiconductor supply chain.

As per the same report, the Chinese Ministry of Industry and Information Technology (MIIT), which is responsible for national automotive industry policy, has asked major Chinese automakers to increase the local procurement ratio of automotive chips to 20-25%. This request targets not only the major electric vehicle manufacturer BYD but also SAIC Motor, Dongfeng Motor, GAC Motor, and FAW Group.

However, this requirement is not mandatory; instead, it encourages automakers to expand their procurement of local chips through incentives. An industry source cited by the same report revealed that ultimately, the goal is for all automotive chips to be locally sourced.

The report further indicates that though the conflict between China and the U.S. in the semiconductor sector continues to intensify, manufacturing technologies used for automotive chips are usually not the most advanced, and therefore not subject to U.S. export controls.

This means that Chinese semiconductor manufacturers will be able to procure manufacturing equipment from overseas, bolstering their automotive chip businesses.

Read more

• [Insights] China’s Position in EV Battery Market to be Shaken as the Mass Production Race of All-Solid-State Battery Industry Speeds up?
• [News] South Korea Reportedly Develops AI Chips for Autonomous Vehicles, Challenging NVIDIA

(Photo credit: iStock)

The Kunpeng Pro development board, an alternative of Raspberry Pi, is reported to be powered by a quad-core 64-bit Arm processor and an AI processor integrated into the same package. However, details of these processors remain undisclosed.

This is a tactic Huawei has employed previously to deter Western scrutiny. Huawei has been facing strict sanctions from the U.S. government, restricting its access to certain chips and chip-making technologies. On May 7th, the U.S. authority revoked the licenses of Intel and Qualcomm to supply semiconductor chips used in laptops and handsets to Huawei, which took immediate effect.

The development board is reported to be designed for a diverse user base, including consumers, developers, and students. It comes preinstalled with the openEuler OS, the openGauss database, and a range of internet, productivity, and software development tools.

Tom’s Hardware has learned that Kunpeng Pro uses a custom Huawei Kunpeng CPU that is paired with an AI FPGA processor. The CPU is believed to be a quad-core ARM model, while the AI FPGA processor is reportedly to offer 8 TOPS (Trillions or Tera Operations per Second) of AI computing power.

Qualcomm’s Snapdragon X Elite, launched in late 2023, delivers peak AI computing performance of 45 TOPS, while Apple’s M4, released in early May, is rated at 38 TOPS.

(Photo credit: Orange Pi)

According to a report from Nikkei Asia, Arm, a subsidiary of SoftBank Group, is developing AI processor to be used in SoftBank’s data centers. The report states that Arm has already established a department specific to AI processors at its UK headquarters in hopes of having prototypes ready by spring 2025, with an official release in spring 2025, and mass production at wafer foundries starting in fall 2025. SoftBank will bear the initial development costs, expected to reach several hundred billion yen.

As per the plan, SoftBank intends to build Arm-based data centers in the United States, Europe, Asia-Pacific, and the Middle East by 2026. Given the high power supply requirements of data centers, SoftBank also plans to expand its presence into the power generation sector, developing wind and solar energy facilities and exploring next-generation nuclear fusion technology.

The report indicates that once Arm’s AI processors enter mass production, the AI chip business might be spun off. Additionally, SoftBank aims to implement a broader strategy in the AI field to enhance the competitiveness of its data center, robotics, and power generation divisions, and to facilitate innovation. SoftBank CEO Masayoshi Son has emphasized that the application of general artificial intelligence will fundamentally transform industries such as shipping, pharmaceuticals, finance, manufacturing, and logistics.

Statistics show that the AI chip market size is mushrooming, projected to surge from USD 30 billion in 2024 to over USD 100 billion by 2029, and exceed USD 200 billion by 2032. Therefore, despite NVIDIA’s current leading position, various chip companies are striving to meet the demands for AI chips across different industries, seeking opportunities in this fast-growing market.

Citing Stephen Dyer, Greater China co-leader and head of the Asia automotive practice at global consultancy AlixPartners, the report stated that Chinese automakers are expected to go to Europe first, among other established and mature markets, as they monitor the evolving political landscape in the US.

President Biden announced new tariffs on Tuesday, targeting Chinese electric vehicles, semiconductors, batteries, solar cells, steel, and aluminum. The tariffs on Chinese EVs will increase to 100%, quadrupling the current rate of 25%, which takes effect in 2024.

As a result, some Chinese EV makers are expected to become more cautious about expanding overseas. In the meantime, these manufacturers are also preparing for potential challenges in Europe, where the European Commission began investigating Beijing’s subsidies for carmakers last year, according to South China Morning Post.

In October, 2023, the European Commission, responsible for trade policy in the 27-nation European Union, initiated an investigation to determine if fully electric cars manufactured in China were benefiting from distortive subsidies and thus merited additional tariffs.

The deadline for implementing provisional measures like tariffs or quotas is July 4, nine months after the Commission initiated its investigation, according to EU regulations.

In January, TrendForce has projected that the global sales volume of NEVs (including BEVs, PHEVs, and FCVs) is estimated to reach approximately 12.8 million units in 2023. Regional market sales shares are expected to be 60% in China, 22% in Western Europe, 11% in the United States, and 6% in other regions, with China’s market demand distinctly in the lead.

However, with China’s subsidies gradually phasing out and the increasing market penetration of NEVs in the country, the growth rate of China’s NEV market is starting to slow. This, coupled with the growing demand for electric vehicles in overseas markets, is prompting numerous Chinese automotive brands to expand internationally, particularly in Southeast Asia, where they are projected to hold a 67.5% market share in 2023.

(Photo credit: BYD)

Regarding the national security risk investigation launched by Washington earlier this year into Chinese automobiles, Raimondo expressed concerns that Chinese connected vehicles could collect a vast amount of data about Americans, including who they are, what they say in their car, where they go to, as well as their patterns of driving.

Per Reuters, the US administration initiated a review in February this year on whether the import of Chinese automobiles poses a national security risk. Raimondo stated on May 8th that the Department of Commerce is reviewing the public’s comments on this review submitted before April 30th.

Read more

• [News] U.S. Imposes Further Sanctions, Revoking Intel and Qualcomm’s License to Supply Chips to Huawei
• [News] US Considers Sanctioning Huawei-Linked Chinese Chip Network, Huawei-Related Enterprises Blacklisted

(Photo credit: Pixabay)

Bloomberg further indicates that the latest tariff decision is the culmination of a review of the final outcome of the so-called Section 301 tariffs, which were initially implemented during the previous US administration starting in 2018.

The US government is now preparing to impose targeted new tariffs on key industries such as electric cars, batteries, and solar cells. The full decision statement is expected to largely maintain existing tariffs.

Two sources cited by the report stated that the US government plans to announce this tariff policy next Tuesday. The full details are currently unclear.

Regarding this matter, the White House has declined to comment.

Besides the rumored new tariffs, per an announcement of the US government, it indicated that the US government would triple the tariff rate on steel and aluminum imports from China. The US believes it is necessary to strengthen countermeasures against products overcapacity and non-market investments from the Chinese government.

The punitive tariff rate was previously at 15%. In 2020, during the administration of the previous government, it decreased to 7.5% after the US-China trade negotiations reached an agreement. If the rate triples, it will approach the highest level of punitive tariffs, nearly 25%.

Read more

• [News] US Government Considers Adding ChangXin Memory Technologies to Entity List, Imposing Further Sanctions on Chinese Firms
• [News] Bypassing U.S. Restrictions? CXMT Showcases GAA Technology for 3nm Chips
• DRAM Industry Sees Nearly 30% Revenue Growth in 4Q23 Due to Rising Prices and Volume, Says TrendForce

(Photo credit: iStock)

It is suggested that Apple’s server chips may focus on executing AI models, particularly in AI inference, rather than AI training, where Nvidia’s chips currently dominate.

Over the past decade, Apple has gradually become a major player in chip design for products like iPhone, iPad, Apple Watch, and Mac. The latest project involving Apple chips for data center servers, internally named “Project ACDC” (short for Apple Chips in Data Center), will integrate Apple’s IC design capabilities into the operation of clients’ servers, sources said.

The project has been in operation for several years, though the timetable for launching this server chip remains unclear. Apple is expected to unveil more new AI products and AI-related updates at its Worldwide Developers Conference (WWDC) in June.

An Apple spokesperson declined to comment on the reported developments.

According to reports from Wccftech on April 23rd, Apple is said to be working on a self-developed AI server processor using TSMC’s 3-nanometer process, with plans for mass production expected in the second half of 2025.