Tesla partners with Annex Semiconductor to set up an autos chip joint venture in China, as reported by South China Morning Post. This comes at a time when the EV maker pushes into the semiconductor sector during the promotion of Beijing of its domestic industry.
(Photo : by Xiaolu Chu/Getty Images)
SHANGHAI,CHINA - MARCH 29: An aerial view of Tesla Shanghai Gigafactory on March 29, 2021 in Shanghai, China. Tesla Shanghai Gigafactory is reportedly producing vehicles at a rate of about 450,000 cars per year.
The Joint Venture
The joint venture is expected to supply automotive chip and electronics solutions. Annex is a global leader in automotive system-on-chip microcontrollers and processors, image sensors, and power device products. Their products are used for assisted and autonomous driving. Tesla hasn't responded yet to the partnership.
The automaker dominates the premium EV segment in China with its Shanghai Gigafactory, the first fully-owned foreign car-making plant in the country. The Model 3 and Model Y vehicles are all assembled in China.
Also read: Tesla Will Assist China Probe a Tragic Model Y Car Crash
What This Means for Tesla
The EV giant's push into the auto chip sector signifies its localization strategy in China, following the millions of shipments in August. During that time, Tesla said that the domestic supply chain in China delivered 95 percent of the components and materials it needed for its Gigafactory.
The move also comes at a time when China is in a battle with the US. With the presence of the US trade sanctions, it is restricting China's chip-making ability to 14-nanometer. However, Tesla's way of using domestically-produced chips can be a huge thing for China to develop mature node chips due to the volume of Tesla's shipments every year.
What's Next
With the new partnership with Annex, China can be the country to develop mature node chips. This can also be good news for the domestic semiconductor sector and Tesla's Beijing Gigafactory. The EV maker is gaining more steps in entering into the Chinese semiconductor sector, which is beneficial for the further promotion of China's EV industry.
Annex Semiconductor is a global leader in chip technologies for the automotive sector. With the partnership, Tesla could take an opportunity to invest and gain access to Annex's latest technologies and sell them to the Chinese market.
Annex will be a good choice for Tesla to compete with powerful Chinese chip makers like Huawei, Baidu, and Alibaba, which have much more prowess in the area of semiconductors. They are also heavily investing in the development of semiconductor tech, particularly in autonomous driving, AI, and big data.
Hence, this move from Tesla can be a great opportunity for the Californian EV maker to align with the dominant and fastest-growing market in the world. This can be a further step in supporting local partners to develop with Tesla to produce high-quality vehicles and chip technologies.
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Written by April Fowell from Tech Times.
