Volkswagen to develop its own chips in China

Volkswagen Group plans to develop its own advanced semiconductors in China to support locally made semi-autonomous vehicles.

The company said its joint venture Carizon, formed with Chinese chip designer Horizon Robotics, will create a system-on-a-chip (SoC) for delivery within three to five years.

The chip is intended to process data from cameras and sensors in autonomous vehicles, with computing power projected between 500 and 700 tera operations per second.

Volkswagen is aiming to strengthen its position in China’s EV market, where it has recently lost market share to local competitors such as BYD.

The chip will be used in Volkswagen’s third-generation EV technology platform, CEA, with the company saying that 80% of its cars sold in China by 2030 will be based on this architecture.

Other Chinese EV makers including Xpeng and Nio are also developing in-house smart-driving chips as competition intensifies in the sector.

Volkswagen owns a 5% stake in Xpeng and is co-developing new vehicles with the company.

🔗 Source: South China Morning Post

🧠 Food for thought

Implications, context, and why it matters.

Volkswagen’s 500–700 TOPS chip timeline depends on foundry access and node maturity

The 3 to 5 year window depends on the foundry and the process node as export controls in China limit access to advanced lithography tools. Horizon Robotics’ Journey 6 uses the Nash Brain Processing Unit (BPU) for Transformer models, a widely used AI neural network design 1. ZF’s ProAI (its centralized vehicle computer) with Journey 6P reaches 1,000+ Tera Operations Per Second (TOPS) 2, and hitting 500 to 700 TOPS needs balance with nodes Chinese fabs can run.
Journey 5 reaches 128 TOPS 3, and over 20 OEMs (Original Equipment Manufacturers) picked Journey 6. Bosch’s J6E or J6M ADAS platforms won deals with five OEMs, and the first mass-produced model ships in June 2025 4. The leap to Volkswagen’s target needs a new process node or an architectural jump, and both face limits from China’s domestic fabs plus geopolitics.

Third-party toolchains can bridge fragmentation as Chinese OEMs build mixed ADAS chips

Volkswagen, Xpeng, and Nio build chips with Horizon parts. Developers face mixed hardware that needs different software stacks. Horizon offers an open toolchain and SDKs (Software Development Kits) for its BPU 1, which targets Transformer models, a widely used AI neural network design.
Investors can watch startups building compiler toolchains that tune Vision Language Models (VLMs) and end-to-end driving models 2 across varied system-on-a-chip (SoC) platforms. Horizon works with Wind River and Aptiv 5, with software moving to run on many compute options. That leaves a gap for independent vendors with framework-agnostic tools for China’s fragmented ADAS chip market.