“SHANGHAI. The Volkswagen Group is entering the development of its own computer chip in China. The company announced this on Wednesday in Shanghai. The AI chip is expected to be used in automated driving in the People's Republic within a few years. According to information obtained by the F.A.Z., VW is investing $200 million in the project, thus reaffirming its commitment to the Chinese market.
This is not the first time VW has ventured into this segment. Under Herbert Diess, the predecessor of current VW CEO Oliver Blume, VW, through its software unit Cariad in Germany, pursued similar plans to develop its own chips. In Europe, the group is now focusing more on a kind of co-design approach with semiconductor partners.
In China, the subsidiary Carizon will be responsible for the development. Carizon is a joint venture between Cariad and Horizon Robotics, a Chinese company specializing in automated driving. "By designing and developing the system-on-a-chip here in China, we are taking control of a key technology that will define intelligent driving," Blume is quoted as saying in the press release. So-called system-on-a-chip (SoC) systems combine all the important components of a computer on a single chip and thus form the heart of autonomous driving. According to the press release, the AI chip will be capable of controlling autonomous vehicles for which VW assumes responsibility for any accidents. In the usual classification of autonomous driving, this refers to Level 3 and above. Level 3 means that the system can drive autonomously, for example on highways, and the driver does not need to concentrate on the road during this time.
In recent years, VW has massively expanded its development department in China. In Hefei, a metropolis in the eastern Chinese province of Anhui, the group has built a kind of Chinese Wolfsburg, which develops vehicles exclusively for the Chinese market. Within two years, the group plans to launch 20 electrified models that are entirely geared towards China. The Audi without rings, a brand newly established in collaboration with the Shanghai state-owned company SAIC, has been on sale since September.
"We are accelerating and deepening the implementation of our 'In China, for China' strategy," VW China CEO Ralf Brandstätter is quoted as saying. He added that they are not only producing locally but also now mastering key technologies in China. "The Volkswagen chip is being developed with our Chinese customers at its core."
According to the plans, the chip is to be delivered in three to five years and will offer a computing power of 500 to 700 tera operations per second. This would put the VW Group significantly behind Chinese car manufacturers such as Nio and Xpeng, in which the VW Group holds a stake. According to reports, these companies already have their own computer chips with 750 and more tera operations per second. The same applies to the AI chips from Nvidia and Tesla for automated driving.
Volkswagen is under enormous pressure in China. While the company remains China's second-largest car seller after BYD this year, electric vehicle sales are collapsing. As a result, the company is reverting to being primarily a supplier of combustion engine vehicles in China this year. By the end of September, VW had sold only slightly more than 85,000 electrified vehicles, which is just over half the number sold in the same period last year. Sales of combustion engine vehicles, on the other hand, even increased slightly. According to data from the Shanghai automotive consultancy Automobility, only about four percent of the cars VW sells in China are now electric vehicles.
One reason for this weakness is considered to be the poor digital equipment. Neither the infotainment systems nor the advanced driver-assistance systems (ADAS) can currently compete with those of domestic Chinese manufacturers. Advanced ADAS are already widespread in the People's Republic. Officially, these are Level 2 systems, where the driver must be able to intervene at any time. However, many Chinese customers place a great deal of trust in these systems, partly due to their advanced capabilities. Aggressive marketing promises from manufacturers. After several devastating accidents, the government recently took action; it attempted to strengthen the safety of the systems and banned overly aggressive marketing.
With its cooperation with Horizon Robotics, VW is not the only manufacturer relying on Chinese ADAS developers. Horizon's competitor Momenta collaborates with BMW, Mercedes, Toyota, Nissan, and General Motors, among others, as well as with VW and Audi. Many manufacturers are also increasingly using Chinese suppliers of sensors and LiDARs.
Computer chips were recently in the spotlight and are repeatedly at the center of geopolitical attention. The US government is prohibiting the US manufacturer Nvidia from selling its most advanced semiconductors in China, which is one reason why the Chinese government is heavily promoting its domestic semiconductor industry. VW chose China's International Import Expo (CIIE) as the venue for announcing its new plans. The CIIE is a trade fair initiated by the government, which many Western companies use primarily for cultivating relationships with local governments.
In recent weeks, the Chinese-Dutch chip manufacturer Nexperia has been in the spotlight, caught between geopolitical fronts. However, it does not produce advanced AI chips, but rather comparatively simple chips.” [1]
What is the price of the chip that offers a computing power of 500 to 700 tera operations per second?
Chips offering 500-700 Tera Operations Per Second (TOPS) vary greatly in price, from developer-focused systems like the Nvidia Jetson Orin Nano Super (around $249) for hobbyists to industrial/automotive chips from companies like Volkswagen's CARIAD (future release, pricing unspecified) or high-end data center GPUs (thousands to tens of thousands of dollars for H100s/Blackwell, far exceeding 700 TOPS but showing scale). For that specific range, expect prices from a few hundred dollars for dev kits to potentially thousands for specialized units, with data center chips costing vastly more.
Examples & Price Ranges:
Entry-Level/Hobbyist (Near 500 TOPS): The Nvidia Jetson Orin Nano Super is around 100 TOPS and costs $249, but signifies the affordable end for AI dev, showing that even lower TOPS have entry-level pricing.
Automotive/Future (500-700 TOPS Target): Volkswagen's CARIAD is developing chips with this capability for self-driving cars, but these are not consumer-priced yet, targeting future vehicle integration.
High-End/Data Center (>>700 TOPS): Chips like Nvidia's Blackwell (for data centers) offer vastly higher performance (many thousands of TOPS), costing tens of thousands of dollars per unit, showing the upper limit for extreme power.
Key Factors Influencing Price:
Application: Consumer/hobbyist vs. automotive vs. data center.
Form Factor: System-on-a-chip (SoC) vs. discrete GPU.
Volume: Single units for developers vs. bulk orders for manufacturers.
1. VW entwickelt eigenen KI-Chip für China: Konzern stemmt sich gegen Abstieg im Reich der Mitte / Aber kann VW mit chinesischen Konkurrenten mithalten? Frankfurter Allgemeine Zeitung; Frankfurt. 06 Nov 2025: 26.
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