According to Zhito Finance APP, TrendForce Consulting stated that China, due to its large market, is driving the formation of the China for China supply chain, especially evident in the auto industry. As China encourages domestic car manufacturers to increase the use of domestic chips to 25% by 2025 and supports foreign enterprises in local production, the China for China strategy and cost considerations are leading European and Japanese IDM companies to adopt a more positive attitude toward cooperation with Chinese wafer fabs. Major automotive chip suppliers such as STMicroelectronics (STM.US), Infineon, NXP Semiconductors (NXPI.US), and Renesas have been actively discussing cooperation with Semiconductor Manufacturing International Corporation (688981.SH) and Hongli in recent years, which will help accelerate the development process of diverse platforms for Chinese wafer fabs.

In the past, due to the slow development of eFlash/eNVM processes in Chinese wafer fabs and the long validation process required for automotive products by car manufacturers, it has been difficult for Chinese wafer fabs to secure outsourced orders for automotive MCUs from IDMs. In recent years, in addition to considering international circumstances and meeting localized production requirements, Chinese car manufacturers have been launching affordable vehicle models, prompting automotive suppliers to actively seek effective options to reduce costs.

TrendForce Consulting indicated that in the field of industrial control/automotive MCUs, STMicroelectronics is the first to collaborate with Hongli on the development of 40nm industrial control/automotive MCU products. If the process development goes smoothly, mass production is expected before the end of 2025. Renesas, Infineon, and others have also been actively discussing foundry cooperation with Chinese wafer fabs starting in 2024. NXP Semiconductors recently publicly mentioned that it will establish a supply chain in China; although there are no plans for a factory, it is also negotiating foundry matters with Chinese wafer fabs.

For overseas wafer fabs with a presence in China, it may be possible to assist customers in shifting products through process or platform collaboration among different factories to meet localized production requirements. However, their foundry prices still need to compete with those of local Chinese wafer fabs, which presents considerable pressure and challenges.

TrendForce Consulting pointed out that although IDMs and Chinese wafer fabs are actively establishing cooperation in automotive and industrial control related chips, it still requires a more rigorous standard validation and car manufacturer verification compared to consumer applications before they have the opportunity to enter mass production. Accordingly, TrendForce Consulting estimates that products manufactured by IDMs in response to the China for China initiative will begin to be officially produced and make revenue contributions in the second half of 2025, with the impact continuing to expand until 2026.