JW Insights: Chinese home appliance giants speed up developing home-made chips

By Kate Yuan

Chinese home appliance giants including Midea, Hisense, and Gree are ramping up investment in self-made home appliance chips amid intensified geopolitical and supply chain changes, according to a JW Insights report in December 2022.

China is the world's largest home appliance manufacturing base, but the core chips for home appliances mainly depend on imports. Over the last couple of years, the US export controls and ban on Huawei chip have destabilized supply chains for more Chinese companies.

Some Chinese manufacturers turned to sett up their own chip companies. Several Chinese design houses for home appliance chips also partnered with OEM manufacturers to achieve breakthroughs, despite their lack of sufficient market data to prove product reliability and consistency as latecomers.

As early as 2000, Haier established an IC design company in Beijing. It developed the first MPEG2 decoding chip in 2001 that could be commercially produced. In 2005, Hisense’s chip arm developed China's first digital video processing chip "HiView" VPE1X with independent intellectual property rights. In January 2022, Hisense released China's first self-developed 8K AI image processor, representing the highest processing capability of a single image quality chip in China.

Midea, Gree, and TCL also founded chip companies in recent years. The MCU MR88F001 developed by MR Semiconductor (美仁半导体), a Midea subsidiary, has shipped more than 10 million pieces with world lowest failure rate. The EM32 series general-purpose industrial control 32-bit MCU, by Gree’s chip developer Edgeless (珠海零边界), hit an annual output of tens of millions.

Qu Zongfeng, vice president of the China Household Electric Appliance Research Institute (CHEARI, 中国家用电器研究院), said that the localization rate of chips for refrigerators, washing machines, and air conditioners has risen from less than 2% in 2016 to 17.4% in 2021, and it is expected to reach 22% in 2022.

Despite all the achievements, there is still a big gap compared with overseas manufacturers. According to ChinaIOL, a leading Chinese home appliance data platform, Japanese and German companies dominated the global home appliance MCU market in 2021 with Japanese companies accounting for over 70% of the global home appliance IPM (Intelligent Power Module) market.

Feng Weishi, deputy general manager of MR Semiconductor, said that foreign chip companies have first-mover advantages in technology and manufacturing, and it would take some time for Chinese chip companies to catch up.

“For domestic chip makers, the biggest bottleneck is that latecomers lack sufficient market data to prove that they can match imported chips or even do better, so home appliance companies are relatively cautious about larger scale use,” Feng added.

Qu Zongfeng also pointed out that home appliances are durable goods and usually produced in large quantities. The breakdown in certain batches would impose high cost pressure on the makers. In addition, considering their over 10-year-long service life, home appliance manufacturers attach great importance to the reliability of the chips used.

Furthermore, the ecosystem of domestic home appliance chips is not sound enough, and the product compatibility can not compare with imported chips, Qu noted.

High reliability is the guarantee of high-quality domestic home appliance chips. Experts said that when designing a chip, companies should take into consideration of a variety of factors such as waterproof, moisture-proof, dust-proof, anti-static, and mechanical damage and stress resistance. During the manufacturing process, consideration must be given to anti-static, anti-interference, anti-thermal load and anti-thermal damage.

“Redesigning the original hardware platforms is also important for home appliance makers when using domestic chips, in addition to establishing complete reliability testing and verification platforms,” said Xiong Jun, general manager of TCL Air Conditioning R&D Center.

According to Xiong, accelerating domestic substitution of home appliance chips requires not only supportive national policies, but also collaboration between upstream and downstream industries, encouraging more downstream system manufacturers use domestic chips on a larger scale.

“Intelligentialization, IoT, networking, and user data learning all require higher computing capabilities for home appliance chips, and they need to integrate more functions including online upgrades, data collection, learning, and intelligent decision-making,” Xiong added.