We See Things
Differently

Welcome to The Stream: Allison+Partners’ content hub that features the latest news and trends making the biggest waves in media and marketing.

MAY 18, 2017 //     

Intelligent Automobiles: Why Beijing Will Not Let Intel Drive China's Smart Car Industry

Intel

By: David Wolf

In March, global semiconductor giant Intel announced its acquisition of Mobileye, an Israeli firm that has developed a key sensor technology for intelligent automobiles, and whose products complement Intel’s in this area. The move brings Intel nearer to its goal of offering a complete technology platform for autonomous vehicles and hands-free driving, an integrated set of capabilities that will essentially become an industry standard, similar to how its microprocessors have dominated in computing.

Despite a busy month for the Chinese government, Intel’s move did not go unnoticed. The acquisition received broad coverage in China’s media, and is the focus of considerable speculation online.

China’s leaders understand that soon they will have to choose between pursuing policies to encourage the development of a home-grown substitute for the Intel-Mobileye platform, or policies that will encourage others to build their own innovations atop Intel’s platform.

Initially, at least, the former course appears likely for several reasons:

  • Intel’s move touches three large strategic industries: semiconductors, which have been identified as a key area of focus in the coming decade[i]; automobiles, a sector wherein China is determined to build domestic brands with international markets; and transportation, where the interaction between smart highways and autonomous vehicles has become a focus of regulators seeking ways to ease traffic congestion in China’s cities.
  • China is set to become the world’s largest automotive market in the very near future. China’s policymakers are keen to control the supply chain for all products for which there is high domestic demand.
  • Electronics have now surpassed the engine and drive train as being the most costly - and most profitable - system in the automobile, and the advent of intelligent and autonomous vehicles will accelerate that trend.
  • The intelligent car platform will likely be the highest value-add part of the vehicle, and Beijing is focusing its support on industries and sectors that can retain the highest proportion of value.

The facts above raise two questions: when will China begin this effort, and how will the global industry respond?

Chinese companies like BYD, Shanghai Automotive, SMIC, Tencent, and Baidu each currently possess different pieces of what might evolve into a Chinese platform. Unsurprisingly, then, talks to form consortia to develop integrated platforms are likely already underway.

China will likely move soon. When it does, non-Chinese companies in the intelligent vehicle market will be faced with having to fight domestic competition in a market where the government has no compunctions about ignoring WTO guidelines on behalf of fledgling industries.

For their part, non-Chinese companies in the space can ill-afford to surrender the massive China market. More than any other market, China offers the necessary scale to build global competitive advantage. Abandon China, lose the world.

Continued engagement in China is essential. But to win a meaningful piece of the market, companies will have to demonstrate to Beijing and the nation’s automotive industry that China is better off with them than without them.

David Wolf is a partner and managing director of Allison+Partners’ global china practice.  

Notes:

[i] Dieter Ernst, From Catching Up to Forging Ahead: China’s New Role in the Semiconductor Industry,  (Honolulu, The East-West Center, 2015) p.viii

 

The Stream

Articles + Opinions Delivered Directly to your Inbox.

Sign Up today!

NATGEO // Feb 13, 2018 photo by: @renaeffendiphoto // Children playing in the hills of Khinaliq village, Azerbaijan. Located at 2350 meters above the sea level, Khinaliq dates back to the Albanian Caucasus period. This isolated community of shepherds and their families speaks i
DANIELARSHAM // Feb 13, 2018
TMAGAZINE // Feb 13, 2018 As designer @PrabalGurung prepared his fall/winter 2018 collection, he drew inspiration in China’s Mosuo tribe — and female empowerment. From fittings in his New York showroom to a colorful finale on the runway, click the link in our bio to watch it all c
GOODTYPE // Feb 13, 2018 Up next for the “Love Yourself” #goodtypetuesday mural contest is @designermike with a colorful entry! . . . Valentine's Day is upon us, and this week is all about the power of love. We teamed up with Brooklyn based muralist and artist, @jasonnaylor t
BUSINESSINSIDER // FEB 13, 2018
Bitcoin 101: Your essential guide to cryptocurrency t.co/yoRaxky3yb t.co/s3i2vC2al3
THEAVCLUB // FEB 13, 2018
Tiffany Haddish and Melissa McCarthy join forces for mob drama The Kitchen t.co/GiYRu5Q0Kq t.co/wTYitCLHVf
MENTAL_FLOSS // FEB 13, 2018
Pigeons Are Secretly Brilliant Birds That Understand Space and Time, Study Finds — t.co/VjqHSKoJWH t.co/nrTxAaW77Y
LANCEULANOFF // FEB 13, 2018
Listicles, Facebook style. t.co/FjK8078tZL
ADFREAK // FEB 12, 2018
.@PlayStation turned the Golden State @Warriors court into a huge God of War ad on Sunday: t.co/bB8vEPy4SU t.co/TcTEDgY7tY
VULTURE // FEB 12, 2018
#TheDailyShow's Michelle Wolf is making a jump from late night to a new show on Netflix t.co/vARdj41e2S
LANCEULANOFF // FEB 12, 2018
Back to the Moon... t.co/1VGdlYfl9T
BUSINESSINSIDER // FEB 12, 2018
CRYPTO INSIDER: Get all the bitcoin and cryptocurrency news you need to know delivered direct to your inbox… t.co/sgQtBCXq3s
BRIANSOLIS // FEB 12, 2018
Digital darwinism opens the door to an age of assistance t.co/TAAm96IHh5 via @thenextweb
NATESILVER538 // FEB 12, 2018
The NBA could require these scheduled rest days to be announced 24 or 48 hours in advance. Star players are already… t.co/AmnXI8AtPG
ERICTTUNG // FEB 12, 2018
How Artificial Intelligence Will Revolutionize Your #Business t.co/8jYpsnt0t4 t.co/fVTVHvMjdC
GOODTYPE // Feb 11, 2018 “I just want to be where you are” by @lynnhavendesigns. Brigitte is a Utah based digital lettering artist. This piece was digitally hand lettered using her Watercolor Lettering Brush kit in Procreate on the iPad Pro. You can checkout more of her brushes a
TMAGAZINE // Feb 11, 2018 #RoomOfTheDay: Hydra has long inspired artists and intellectuals from Henry Miller to Leonard Cohen, and even today with the influx of art stars and yachting billionaires, its unspoiled charm remains intact. Here, in the living room of @BriceMarden’s form
CHRISCONNOLLY // Feb 11, 2018 In the world’s least surprising personal news - I’m moving back to Brooklyn today.
ABSTRACTSUNDAY // Feb 11, 2018 Sunday sketch Tape Bike. Available as limited edition offset print (signed and numbered). See link in bio.