Visitors inspect Aito M8 models in a shopping mall in Haidian district, Beijing, in February. WANG YUCHEN/CHINA DAILY
The rising prices of automotive-grade memory chips are adding pressure on Chinese automakers who face softer sales and narrower margins, prompting them to strengthen cost control and supply chain coordination, industry experts said.
The broader rollout of intelligent vehicle functions has increased onboard memory requirements across cockpit and driver-assistance systems, leaving automakers more exposed to volatility in memory chip prices.
The cost pressure comes as China’s passenger vehicle market is under strain. Passenger vehicle retail sales reached 7.11 million units in the first five months of 2026, down 19 percent year-on-year. Meanwhile, auto industry profits fell 20 percent to 144 billion yuan ($19.9 billion), according to data from the China Passenger Car Association. The industry’s profit margin fell to 3.4 percent, the lowest level for the same period in five years.
The strain has been amplified by a sharp rise in automotive-grade memory chip prices. Chinese news reports said prices of automotive-grade memory chips rose by about 180 percent from March to June.
Separately, market research firm TrendForce reported a surge in contract prices for dynamic random access memory, or DRAM, and NAND flash products, as demand for artificial intelligence applications tightened supply.
For automakers, the effect is being reflected in vehicle costs. William Li, founder and CEO of Nio, said that the cost of the L60, a five-seat electric SUV under Nio’s Onvo brand, had increased by more than 10,000 yuan, with chips and batteries among the major factors.
Zhang Xinghai, founder and former chairman of Seres Group, said at an industry forum in June that memory chip prices had climbed sharply, while higher lithium carbonate prices added pressure.
Zhang said the average cost of a vehicle under Seres’ Aito brand had increased by about 15,000 to 20,000 yuan.
Rising costs are emerging at a time when price discounts are growing less effective in spurring sales. A McKinsey report on Chinese auto consumers found that prolonged price wars have encouraged some buyers to wait for discounts, while technology upgrades and improved features appear to be having a positive effect on purchase decisions.
Against this backdrop, carmakers are seeking to move beyond price-led competition and strengthen cost management across their supply chains. Zhu Jiangming, founder and CEO of Leapmotor, said price competition may prevail in the short term, but supply chain capabilities will matter more over the long run.
One approach is to diversify battery suppliers, as power batteries remain one of the largest cost items in new energy vehicles. Building a broader supplier base can help automakers reduce dependence on a single source and gain more flexibility in procurement.
Zheng Yali, deputy secretary-general of the China Society of Automotive Engineers, said the tight supply of automotive-grade memory chips was not merely a cyclical fluctuation, but reflected a deeper mismatch between surging demand for artificial intelligence computing power and the rapid adoption of intelligent vehicle technologies.
Zheng said the auto industry should go beyond short-term measures to secure supply and focus more on long-term capability building. That means working more closely with chip companies to define demand, codevelop products and improve supply-chain mechanisms, while also building in-house capabilities when companies have the scale and resources to do so.
In practice, some automakers are broadening chip supply options while improving control over key computing technologies. Li said Nio is making progress in validating automotive-grade memory chips from ChangXin Memory Technologies for vehicle use.
Separately, the company is increasing the deployment of its proprietary Shenji NX9031 smart driving chip, which could help lower hardware costs compared with configurations that rely on multiple Nvidia Orin chips, said Li.
Tanks to chinadaily.com.cn
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