Volkswagen to Develop Proprietary Chips in China to Boost Smart Driving Capabilities
- ByStartupStory | November 6, 2025
Volkswagen Group has announced plans to develop its own advanced semiconductor chips locally in China, aiming to power its upcoming line of smart and semi-autonomous vehicles tailored for the Chinese market. The proprietary chip project is being developed through Carizon, a joint venture between Volkswagen’s software subsidiary Cariad and Chinese AI chipmaker Horizon Robotics.
The upcoming system-on-chip (SoC) is designed to handle intensive data processing tasks, including real-time camera and sensor data analysis, critical for next-generation advanced driver assistance systems (ADAS) and autonomous driving features. The chip is expected to deliver a computing performance between 500 to 700 tera operations per second (TOPS), placing it among the high-performance processors designed for complex driving scenarios.
This initiative forms part of Volkswagen’s broader “In China, For China” strategy, which emphasizes deepening R&D localization to master core automotive technologies on Chinese soil. VW China Chairman and CEO Ralf Brandstatter emphasized the move as a milestone towards reducing reliance on external suppliers and strengthening control over key technology components that define future mobility.
Volkswagen plans to integrate these chips into vehicles equipped with the third-generation China Electrical Architecture (CEA), expected to enter mass production starting in 2025. By 2026, models equipped with Carizon’s advanced driver-assistance features powered by the new SoC will be available to Chinese consumers.
The move comes amid heightened competition in China’s rapidly expanding electric and intelligent vehicle market, where domestic players like BYD have gained significant market share through vertical integration and cost-effective innovations. Volkswagen aims to regain competitiveness by combining German engineering standards with cutting-edge local semiconductor expertise.
Volkswagen’s in-house chip development underscores a strategic industry trend where automakers are seeking to regain control over semiconductor supply chains disrupted by global geopolitical tensions and trade restrictions. Investing in proprietary chip technology allows automakers to tailor hardware specifically for their software platforms, improving performance, efficiency, and security.
Horizon Robotics brings advanced AI semiconductor capabilities to the partnership, focusing on producing chips optimized for perception, sensor fusion, and AI inference tasks typically needed for autonomous driving functions. The joint venture highlights growing collaboration between global automotive giants and Chinese high-tech firms to innovate and localize critical components.
This chip development will boost Volkswagen’s ability to deploy a full-stack solution integrating hardware, software, and vehicle platforms, supporting scalable production across multiple models. It also aligns with Volkswagen’s long-term vision of creating sustainable, intelligent mobility tailored to consumer needs in China’s largest automotive market.
In conclusion, Volkswagen’s plan to develop proprietary semiconductor chips in China marks a transformative step in the automaker’s strategy to localize innovation, enhance autonomous driving capabilities, and strengthen its competitive position amid the evolving landscape of electric and intelligent vehicles in China. This endeavor reflects the convergence of automotive and semiconductor industries, where future mobility relies increasingly on in-house advanced chip technologies.
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