China's carmakers seek more government support for smart car supply chain

XIAN, China/SHANGHAI (Reuters) - China’s auto industry has called for more government support and tie-ups between auto and tech companies on technologies, such as software and semiconductors, to make the country’s smart car supply chain more self-sufficient.

Government officials and industry executives at the 2020 China Auto Supply Chain Conference, held in the northwestern city of Xian this week, said the supply chain of in-car operating systems and other core technologies lagged behind international levels, a situation they want to change.

China, the world’s biggest auto market, wants sales of vehicles with intelligent functions like internet connectivity and autonomous driving to make up 30% of overall new vehicle sales by 2025.

Beijing has been trying to boost domestic tech capability by pouring billions of dollars into sectors such as semiconductors, after trade tensions between China and other countries, including the United States, exposed the country’s reliance on foreign know-how.

“China’s supply chain of in-car operating system, software and other key core technologies are still far behind the international advanced level,” Ma Chunsheng, an official at the Ministry of Industry and Information Technology, said.

Ma said the government will encourage companies from different industries to work together on key technology breakthroughs like car operation systems.

“Technology startups face financial difficulties and urgently need the government to issue strategic support measures,” said Luo Junmin, senior executive at the China Association of Automobile Manufacturers. Jumin said the government should offer better fundraising platforms to those companies to “support the transformation and upgrading of the automobile industry.”

In-car software and semiconductor products are expected to make up the majority of cars costs by 2030, a recent research report by consultancy Roland Berger and industry think tank China EV 100 estimated.

Chinese internet companies, including Alibaba 9988.HK and Baidu BIDU.O, have launched partnerships with automakers, while Huawei Technologies, BYD 002594.SZ and startup Horizon Robotics are developing semiconductor products.

Reporting by Yilei Sun and Brenda Goh. Editing by Jane Merriman