Beijing: In a bold step towards deepening its technological independence and local integration in China, Volkswagen AG has announced plans to co-develop a new generation of high-performance vehicle chips in partnership with Horizon Robotics, a leading Chinese artificial intelligence (AI) chipmaker. The initiative aims to strengthen Volkswagen’s foothold in the world’s largest auto market while enhancing the intelligence of its next-generation electric and smart vehicles.
The announcement marks a major milestone in Volkswagen’s “In China, for China” strategy an approach designed to bring localized research, development, and innovation to the forefront of the company’s operations. The chip, designed and developed through the CARIZON joint venture between Volkswagen’s software arm CARIAD and Horizon Robotics, will be the German automaker’s first in-house chip specifically engineered for the Chinese market.
According to reports, the new chip will have the capability to process complex sensor and camera data for advanced driver assistance and smart mobility functions. It is expected to deliver an impressive 500 to 700 tera operations per second (TOPS), putting it on par with some of the most powerful automotive chips in development globally. Volkswagen estimates that the chip could be ready within the next three to five years.
By developing its own vehicle chips, Volkswagen is making a decisive move to reduce dependence on third-party semiconductor suppliers and gain greater control over the intelligence inside its cars. This strategic shift comes at a time when global automakers are facing supply chain vulnerabilities, semiconductor shortages, and mounting competition from Chinese electric vehicle makers.
The decision also underscores the growing importance of technological sovereignty in the automotive sector. With vehicles becoming increasingly software-defined and reliant on advanced computing systems, in-house chip development is now seen as essential for maintaining innovation speed, cost efficiency, and long-term competitiveness.
Horizon Robotics, one of China’s foremost AI chip developers, brings to the table deep expertise in edge computing and smart mobility. The collaboration combines Horizon’s semiconductor know-how with Volkswagen’s automotive engineering and software capabilities. Together, they aim to produce a highly integrated, energy-efficient computing platform that can support a broad range of autonomous driving and intelligent vehicle features.
Through CARIZON, Volkswagen and Horizon are already working on advanced driver assistance systems (ADAS) tailored for the Chinese market. The forthcoming chip will further enhance this system, enabling faster data processing, more accurate environmental perception, and safer decision-making for smart vehicles.
China remains Volkswagen’s largest market, but also its most competitive. Domestic brands such as BYD, NIO, and XPeng are aggressively pushing the boundaries of automotive technology with self-developed chips, intelligent cockpits, and fully integrated software ecosystems. By investing in local R&D and manufacturing, Volkswagen is ensuring that its vehicles remain relevant and appealing to Chinese consumers, who increasingly expect high levels of connectivity, automation, and AI-driven features in their cars.
Volkswagen’s Chief Executive for China emphasized that the new initiative represents more than a technological investment it is a commitment to innovation within China’s ecosystem. The company plans to further expand its R&D presence in the country and strengthen ties with local tech firms to co-create future vehicle technologies.
Globally, automakers are recognizing the critical role of chips as the “brains” of modern vehicles. With the industry shifting towards software-defined mobility, computing power has become the key performance metric for next-generation cars. Companies like Tesla and General Motors have already begun developing proprietary chips for their vehicles, and Volkswagen’s move positions it firmly within this new paradigm of vertical integration.
At the same time, the partnership with a Chinese chipmaker aligns with Beijing’s broader push for technological self-reliance in semiconductors. For Volkswagen, it provides a way to stay aligned with local policy goals while deepening its engagement with China’s rapidly evolving tech sector.
Despite its promising potential, the project faces notable challenges. Volkswagen has not yet disclosed details about the chip’s production process, fabrication partners, or cost structure. Developing a high-performance automotive chip involves complex design, testing, and regulatory approvals that could extend timelines. Furthermore, geopolitical factors, such as trade restrictions and export controls, could affect collaboration between European and Chinese tech ecosystems.
Nevertheless, the long-term advantages are compelling. A successful rollout could lead to Volkswagen’s first generation of fully localized smart vehicles, equipped with computing systems designed entirely within China. This model may later serve as a blueprint for Volkswagen’s global operations, reshaping how the automaker approaches vehicle intelligence across markets.
The Volkswagen-Horizon partnership signifies a transformative moment in the automotive industry’s evolution. As cars evolve into intelligent, data-driven machines, control over computing technology will define which companies lead the next era of mobility.
For China, it strengthens local innovation and cements the nation’s role as a global hub for smart vehicle technology. For Volkswagen, it’s a decisive leap toward merging German engineering precision with Chinese digital ingenuity a move that could redefine the global automotive map in the years ahead.