Volkswagen to Build China-Only High-Performance Chip with Horizon Robotics

Volkswagen has announced plans to create its first proprietary chip for smart driving through CARIZON, the joint venture it operates with China’s Horizon Robotics. The company says the new processor will deliver roughly 500–700 tera operations per second (TOPS), enabling advanced handling of inputs from multiple cameras and sensors for enhanced driver assistance and autonomous functions.

The chip is a component of Volkswagen’s intensified research and development focus aimed squarely at the Chinese market. Officials did not confirm whether the design will be used outside China or detail manufacturing plans, but they indicated the technology could be ready for vehicle integration within three to five years — a timeline that underlines Volkswagen’s effort to close the technology gap with fast-moving local rivals.

The move comes amid weakening sales in Volkswagen’s largest market: annual deliveries in China slid to about 2.75 million vehicles in 2024 from more than four million in 2018. Volkswagen also ceded its position as China’s top-selling carmaker to BYD in 2023, as BYD’s competitively priced electric and plug-in hybrid models have captured budget-conscious and eco-minded buyers.

To respond to these pressures, Volkswagen has broadened its local alliances. Beyond CARIZON, the automaker is working with partners such as Xpeng to co-develop vehicle electronics architectures across several models, a strategy intended to sharpen competitiveness and better embed smart features. The push toward domestically developed chips and electronics signals a shift to more localized innovation.

Analysts say success will depend on pairing high-performance silicon with attractive pricing and product design; if Volkswagen can do that, the company may reclaim market share. The initiative also echoes a wider industry trend in which manufacturers seek greater control over critical components for connected and electric vehicles.

More than a technical upgrade, Volkswagen’s chip project represents a strategic bid to reassert itself in China’s rapidly evolving auto sector. The automaker is betting that tailored, locally produced technology will be central to winning back consumers and restoring competitive momentum.