NEV, home appliance firms to see limited impact from US

2023-04-21 08:58:07China Daily Editor : Li Yan ECNS App Download

Reported tech investment ban may jeopardize global market, expert says

Washington's reported plan to take unprecedented action limiting U.S. investments in China's technology sector will only have a narrow impact on Chinese home appliance and new energy vehicle companies, which are doubling down on homegrown innovation and ramping up efforts to achieve breakthroughs in key technologies, experts said.

They also said the move will undermine the stability and security of the global industrial supply chain, hurting the interests of multinationals around the world.

The comments came after a report from U.S. news portal Politico said that "unprecedented rules limiting American investments in China are expected later this month". The action will come in the form of an executive order signed by U.S. President Joe Biden that requires U.S. companies to notify the government of new investments in Chinese tech firms, according to the report. It will also prohibit some deals in critical sectors like microchips.

"Currently, the chips used in home appliances and NEVs are mainly concentrated in low-end to mid-range segments. Chinese companies have accelerated their push to bolster independent research and development and production of vital electronic components, and fuel wider use of domestically designed chips," said Bai Ming, deputy director of international market research at the Chinese Academy of International Trade and Economic Cooperation in Beijing.

He noted that the reported U.S. government's intensified measures to contain the rise of the Chinese tech sector will jeopardize the global semiconductor industry and hinder international tech exchanges and economic cooperation, adding that U.S. companies will suffer greatly from Washington's unprecedented restrictions on investment in China.

"Against the backdrop of an increasingly complicated international situation, Chinese household appliance manufacturers have attached greater importance to the security of supply chains and expanded their footprint in the self-developed chips sector," said Chen Hui, general manager of AVC Revo, a unit of Beijing-based market consultancy firm AVC.

Chen said their layout in the strategically important chip segment will help solve bottlenecks in core components and technologies, and achieve greater self-reliance and strength in science and technology.

"The chip industry requires a great deal of investment and the introduction of cutting-edge technologies, which sets a high threshold for home appliance enterprises aspiring to jump onto the chip bandwagon."

She added that domestic home appliance enterprises should increase their R&D input in chips and crucial components, and strengthen independent innovation to establish a relatively complete supply chain system to buffer against shocks from external uncertainties.

Home appliance giant Midea Group has entered the chip sector by establishing the subsidiary Shanghai Meiren Semiconductor Co Ltd, which is engaged in the R&D, design and sales of micro control unit, or MCU, chips used for electrical control systems, and intelligent power module chips.

Gree Electric Appliances, another Chinese home appliance maker, said the revenue of its wholly owned subsidiary Zhuhai Edgeless Integrated Circuit Co Ltd increased more than 50 percent year-on-year in 2021, with its chip shipments exceeding 70 million units.

Chinese carmakers have also made forays into the AI chip sector. In 2021, Great Wall Motors became an investor in Beijing-based auto chip company Horizon Robotics, which has unveiled its automotive-grade AI processor Journey 5, designed for L4 autonomous driving, with up to 128 tera operations per second of AI computing power on a single chip.

Li Xianjun, an associate researcher at the Institute of Industrial Economics at the Chinese Academy of Social Sciences, said the reported U.S. government restrictions are expected to have a short-term influence on China's imports of crucial equipment and products, given China's role as the world's largest chip market and its growing presence in semiconductor manufacturing.

Li said its impact on Chinese home appliance and NEV companies is limited, as these restrictions are mainly aimed at the high-end tech segment, covering high-performance chips, smart cockpits and autonomous driving.

"In the long run, the move will push Chinese enterprises to step up indigenous innovation efforts, ensure the security of industrial and supply chains, and promote technological innovation and industrial upgrade," he added.


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