Summary of China Smart Driving Chips Conference Call Industry Overview - **Industry**: China Smart Driving Chips - **Key Companies**: Horizon Robotics (Outperform), Black Sesame (Underperform) [1][2] Core Insights and Arguments Market Potential - **Total Addressable Market (TAM)**: Expected to reach USD 15.4 billion by 2030, with a 40% CAGR from 2025 to 2030 [2] - **Penetration Rates**: Anticipated that L2++ (Urban NOA) penetration will reach 65% by 2030, while L2+ (Highway NOA) will plateau in the low 20s [2][18] OEM In-House Development - **Market Share**: Third-party vendors expected to retain over 60% market share by 2030 due to economies of scale [3][26] - **In-House Viability**: In-house solutions become cost-effective only when annual shipments exceed 1.5 million units; few OEMs can achieve this [3][30] Competition Landscape - **Horizon Robotics**: Stands out with a hardware-software integrated model, delivering performance comparable to NVIDIA at lower costs [4][38] - **Momenta**: Potential challenger but 2-3 years behind Horizon in chip development [4][43] - **Qualcomm**: Slow commercialization progress and limited mass production capabilities hinder its competitiveness [42] Financial Projections - **Horizon Robotics Valuation**: Projected annual shipment of J6P to reach 7.1 million units by 2030, corresponding to a 38% market share in outsourced L2+ & Above segment [5][52] - **Gross Margin**: Expected to decline from 77% in 2024 to 57% in 2030 due to changes in revenue mix [57] Additional Important Insights Consumer Preferences - **Smart Driving Features**: Over 70% of Chinese consumers consider smart driving functions important in vehicle purchasing decisions [12][14] - **Importance Increase**: From 2023 to 2024, smart driving features gained the most importance among factors influencing EV purchases [14] Risks and Catalysts - **Geopolitical Risks**: Concerns about the stability of partnerships with foundries like TSMC; however, short-term production is not expected to be affected [60] - **Investment Implications**: Horizon Robotics is positioned for growth due to its integrated solutions and strong R&D capabilities [7][8] OEM Strategies - **BYD's Position**: Struggling with L2+ promotion but expected to invest more in L2++ solutions to enhance user experience [22] - **In-House vs. Outsourcing**: OEMs like NIO, Xpeng, and Li Auto may focus on in-house development for strategic goals, but economic viability remains a concern [30][37] Conclusion The China Smart Driving Chip sector presents significant growth opportunities, particularly for Horizon Robotics, which is well-positioned to capitalize on the increasing demand for advanced driving features. The competitive landscape is evolving, with both in-house and third-party solutions coexisting, but the latter is expected to dominate the market due to scalability and cost advantages.