Key insights
- NIO aims to reduce reliance on Nvidia by developing in-house chips, potentially improving profitability and technological edge. This move reflects a broader trend of Chinese EV makers seeking self-sufficiency in key technologies. While this could increase NIO's competitiveness long-term, it poses a slight negative risk to US equity markets by increasing competition for US chipmakers like Nvidia.
BEIJING, April 24 (Reuters) - NIO is betting that in-house chip development will sharpen its technological edge and improve profitability, Chief Executive William Li said on Friday, as the Chinese premium EV brand pushes to reduce reliance on suppliers such as Nvidia.
Li said NIO developed its own silicon so its chips could better match the company’s algorithms and sensor layout, particularly for AI functions such as advanced driver-assistance.
He told Reuters in an interview that Nvidia’s automotive chips have "very high gross margin," and that by making its own chips NIO could eventually lift its overall profit, despite higher upfront research-and-development costs.
Nio has spun off its chip unit, Shenji, into an independent company, which Li said is open to supplying chips to external customers.
Li said NIO’s nanometer-scale automotive-grade chips and whole-vehicle operating system would be central to its long-term global competitiveness.
The rise of China’s electric vehicle makers presents a "significant opportunity" to redefine the high-end and luxury car market, Li added, opening doors for NIO to become a global premium marque.