CEO William Li says proprietary chips will better match NIO's algorithms and eventually lift overall profit margins
NIO $NIO CEO William Li said the Chinese electric vehicle maker is developing its own automotive chips to reduce its dependence on suppliers such as Nvidia $NVDA, according to Reuters.
Speaking to Reuters, Li said that building chips internally would help NIO's bottom line over time, even accounting for the steeper upfront R&D investment required — noting that Nvidia's automotive chips command "very high gross margin."
According to Li, having its own silicon allows NIO $NIO to tailor chip design specifically around its AI applications — including advanced driver-assistance — in ways that external suppliers cannot replicate for its particular sensor configurations and algorithms.
Shenji, the chip unit NIO $NIO separated into a standalone business, is not limited to serving its parent company — Li indicated the venture welcomes orders from third-party customers as well.
For NIO to remain competitive on a global scale over the long term, Li pointed to two pillars: the company's automotive-grade chips, developed at nanometer scale, and its whole-vehicle operating system.
