Shanghai (ZXZC)- Chen Hong, chairman of China's biggest automaker SAIC Motor, proposed greater efforts to increase the application of locally-produced automotive-grade chips and help the domestic auto industry strengthen the capability of building an independent and well-controlled supply chain.

Photo credit: SAIC Motor

The proposal is among those Mr. Chen submits to the annual political gathering “Two Sessions”—meetings of the country's top legislature and political advisory board National People's Congress (NPC) and Chinese People's Political Consultative Conference (CPPCC)—which will kick off this week.

As a deputy to the NPC, Chen Hong calls for greater supports for the industry of automotive-grade chips based on the supportive policies for consumer-grade chip manufacturers.

He said the government should issue supportive policies dedicated to automotive-grade chips. For instance, the subsidies on the R&D, the production line construction and the application of the first piece (set) of crucial equipment should be launched to decrease companies’ R&D costs and products’ prices; insurance companies should be promoted to design product liability insurances to make the application of locally-sourced chips in completed vehicles guaranteed.

He also suggests a “two-step” top-level design approach for automotive-grade chip makers to complete the transition of being driven by external power from getting stronger with internal strengths.

For the first step, OEMs and system suppliers should work together to support key chip manufacturers in solving the localization issue on automotive-grade chips with relatively low technical thresholds and enhancing the systematic capabilities for the localization automotive-grade chips. As for the second step, chip suppliers should build their inherent dynamism of growth to handle the localization issues for the chips with higher technical thresholds.

Targeting the chips with high technical thresholds, the government and companies should jointly launch special projects to make breakthroughs in complete vehicles, systems and chips, divvying up the R&D costs and sharing patents, said Chen Hong.