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Automakers develop or control selected chips when silicon-level decisions can materially improve a vehicle’s performance, safety, energy use, software architecture or supply continuity. “Build their own” usually means specifying, co-designing or owning a chip design—not operating a semiconductor wafer factory.
The sensible strategy is selective. A carmaker may buy standard components for ordinary functions, secure critical parts through direct contracts, and develop custom silicon only where system integration, differentiation or supply visibility justifies years of engineering and qualification work.
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What “building your own chips” actually means
Automotive semiconductors move through a value chain that includes raw-material and equipment companies, semiconductor manufacturers, distributors, Tier 1 system suppliers and car manufacturers. The European Commission Joint Research Centre describes chipmakers as designing and producing devices such as power semiconductors, microcontrollers, sensors and integrated circuits, while Tier 1 suppliers integrate those devices into systems for advanced driver assistance, infotainment and powertrain control.
That structure matters because an automaker can control a chip’s requirements or architecture without owning the factory that fabricates wafers. The phrase covers several different arrangements:
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| Approach | What the automaker controls | Who normally manufactures or integrates it |
|---|---|---|
| Standard supplier chip | Vehicle specification, qualification and sourcing choice | Established semiconductor vendor; often integrated by a Tier 1 supplier |
| Direct procurement | Commercial relationship, forecasts, allocation and sometimes package or qualification requirements | Semiconductor vendor |
| Jointly specified or co-designed chip | Selected functions, interfaces, safety targets and vehicle-specific requirements | Chip partner or foundry under the agreed design |
| Automaker-owned design | Architecture, verification targets, software interfaces and reuse strategy | External foundry manufactures the design; suppliers may package and integrate it |
| Vertically integrated semiconductor business | Design and, potentially, fabrication capacity | An automotive supplier or affiliated semiconductor operation |
The reviewed automotive examples document procurement control and selected development programs. They do not establish that those automakers own leading-edge wafer fabs. Keeping design ownership separate from fabrication prevents a common misunderstanding about “in-house chips.”
Why chip decisions now affect the whole vehicle
More electronic content and more software
Volkswagen Group says the first-generation Golf used about 30 semiconductors, whereas a current Golf contains thousands (Volkswagen Group, 2025). Each device may be modest on its own, but together they determine how power is converted, sensors are interpreted, software is executed and updates are distributed. Reducing unnecessary hardware variants can also reduce the number of software configurations that engineers must develop and maintain.
Safety and harsh operating conditions
Automotive electronics must tolerate vibration, temperature swings, electrical transients and long service lives. Bosch says it began developing semiconductor elements for vehicles in the 1950s, patented an alternator-regulator diode in 1958 and established production facilities to secure reliable components. Its account contrasts under-hood conditions with consumer-electronics environments, where replacement cycles and operating stresses are different.
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In an electric vehicle, semiconductor losses occur every time battery power is converted by an inverter, charger or voltage converter. Bosch says silicon-carbide (SiC) chips can reduce energy loss, support greater efficiency and range, and enable more compact assemblies. Those are Bosch’s supplier claims, not an independent comparison proving that every SiC design delivers the same improvement.
Supply visibility during shortages
A carmaker that cannot identify the exact devices inside a control unit may discover a shortage too late to qualify an alternative. Direct purchasing, shared databases, longer-term capacity agreements and fewer component variants can provide earlier visibility and more options. None of these measures guarantees uninterrupted supply, but they give the automaker more levers than an opaque, multi-tier purchasing chain.
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The strategic options automakers combine
| Option | Primary advantage | What it does not solve |
|---|---|---|
| Buy a catalog component | Fast access to mature, qualified technology | Limited differentiation and dependence on the supplier’s roadmap |
| Forecast and reserve capacity | Improves planning and allocation for known demand | Does not change the underlying design or eliminate geopolitical and manufacturing risk |
| Buy mission-critical parts directly | Gives the automaker a direct view of orders, inventory and priorities | Leaves engineering and fabrication with the semiconductor supplier |
| Reduce chip diversity | Fewer variants simplify validation, software and service inventory | Concentrates demand on the remaining parts and can create a single-source exposure |
| Co-develop or own a design | Allows hardware, software and vehicle architecture to be optimized together | Requires specialist staff, long qualification cycles and a plan for manufacturing |
Stellantis describes using all of these tools rather than pursuing universal self-sufficiency. Its 2023 strategy includes chip-level forecasts and semiconductor databases, supplier engagement, long-term capacity agreements, direct purchase of mission-critical parts and reduced chip diversity.
What the automaker examples show
Volkswagen Group: procurement control plus selective definition
In a 2025 Semiconductor Summit release, Volkswagen Group says its joint procurement model with Rivian and Volkswagen Group Technologies covers more than 50 semiconductor categories, including microcontrollers, power transistors and printed circuit boards. Volkswagen says it is defining semiconductors for critical parts while strengthening in-house capabilities.
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A separate Volkswagen release from 2023 describes direct purchasing, cross-brand sourcing, transparency into components and supplier collaboration. Knowing exactly which parts are installed can improve demand and availability assessments, help engineers identify technical alternatives during a bottleneck and reduce software complexity when hardware variants are consolidated. These are Volkswagen’s stated procurement benefits, not an independently measured cost or availability result.
Stellantis: develop only where the platform can use the advantage
Stellantis says its planned differentiating-semiconductor work with aiMotive and SiliconAuto focuses on areas where silicon affects the vehicle platform. The 2023 announcement names SiC MOSFETs for electric-vehicle range, microcontrollers for computing zones and systems-on-chip (SoCs) for high-performance computing in infotainment and driver-assistance functions.
The company’s wording describes strategy and planned development, so it should not be read as proof that those programs have already delivered a quantified performance, cost or supply benefit. The underlying logic is to reserve custom effort for functions that can be reused across a platform and coordinated with software and electrical architecture.
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Bosch: a supplier can make the same strategic calculation
Bosch’s history demonstrates that semiconductor capability is not limited to carmakers. The company says it had to build expertise because automotive reliability requirements were difficult to meet with off-the-shelf electronics in the 1950s. Electronics pioneer Karl-Ernst Boeters described the early challenge this way: “Attracting the bright sparks away from the semiconductor companies was simply impossible. There was no literature, either. So we had to study patent specifications.”
Bosch’s current SiC approach emphasizes integration across the chip, power module, inverter, charging system, vehicle electrical network and overall vehicle architecture. Bosch says its Roseville site is scheduled to begin commercial production in 2026; that is a stated plan, not confirmation that production has started.
Where custom silicon creates the most value
Power conversion
Traction inverters, onboard chargers and DC-DC converters switch high currents at high frequencies. A custom or jointly optimized SiC device can be designed around the module’s thermal path, switching strategy and packaging. The value appears at the system level: a chip that is impressive in isolation may provide little vehicle benefit if the inverter, cooling system and control software cannot exploit it.
Zonal and centralized computing
Moving from many distributed electronic control units toward zonal controllers changes the requirements for microcontrollers, networking, memory and safety partitioning. An automaker that owns the hardware-software interface can tune compute resources, diagnostics and update mechanisms to its electrical architecture. The design must still meet automotive functional-safety and cybersecurity requirements over the vehicle’s service life.
Infotainment and driver assistance
High-performance SoCs process camera, radar and user-interface workloads. A vehicle company may seek control over accelerator blocks, memory bandwidth, power envelopes or software toolchains when those factors differentiate the driving experience. However, this is also the area with rapid technology change, so a design that cannot be reused or upgraded may age before the vehicle program ends.
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When does building a chip make sense?
A practical decision is strongest when most of the following conditions are true:
1. The silicon controls a strategic capability
Custom effort is easier to justify when the device affects electric range, charging, automated-driving compute, a zonal architecture or another capability customers and engineers can distinguish. A commodity timing, memory or interface part rarely creates enough unique value on its own.
2. Hardware and software must be optimized together
If the chip’s behavior, drivers, safety mechanisms and power-management strategy are inseparable from the vehicle architecture, design control can prevent compromises at subsystem boundaries. Bosch’s chip-to-inverter-to-vehicle approach illustrates this system-level rationale.
3. Supply priority is worth the organizational effort
Direct design or procurement control can improve component transparency and let the automaker set priorities for critical parts. First determine whether forecasting, a capacity agreement or a second qualified source would solve the risk more cheaply; custom silicon is not the only route to resilience.
4. The company can sustain automotive engineering
Automotive chips require reliability testing, functional-safety evidence, electromagnetic-compatibility work, traceability, production qualification and support for long service periods. The capability includes semiconductor architects, verification engineers, packaging specialists, safety experts, manufacturing partners and a supply-chain team.
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5. Volume and reuse can amortize development
A design used across several models or brands has a better chance of supporting its engineering and qualification burden. Volkswagen’s cross-line procurement model and Stellantis’s platform-oriented plans demonstrate the pursuit of scale, although the cited sources do not state a break-even volume.
When it usually does not make sense
- The component is a mature commodity with several qualified suppliers and no meaningful vehicle differentiation.
- An established vendor already meets performance, safety and lifecycle requirements at the required volume.
- The automaker cannot support verification, software maintenance, field failures and redesigns for the full vehicle program.
- Expected production is too small to spread nonrecurring engineering and qualification costs.
- The proposed design would add another bespoke variant, increasing software, service and inventory complexity.
- Technology is changing so quickly that a custom device could be obsolete before it reaches high-volume production.
These are decision inferences from the procurement and development strategies described by Volkswagen, Stellantis and Bosch. They are not quantified cost studies, and an in-house design is not inherently cheaper or better than a supplier product.
How an automaker should approach a chip program
- Map the vehicle function. Identify the measurable requirement—range, switching loss, compute latency, safety integrity, thermal size or software capability—and the vehicle programs that will use it.
- Classify the supply risk. Record the exact device, package, manufacturing site, lead time, substitutes and dependencies hidden inside Tier 1 assemblies.
- Compare control options. Evaluate catalog purchase, direct procurement, a second source, a jointly specified part and an automaker-owned design against the same performance and lifecycle targets.
- Set the architecture and interfaces. Define electrical, thermal, software, diagnostic, cybersecurity and functional-safety requirements before choosing an implementation.
- Plan manufacturing early. An owned design still needs a foundry, packaging, test, quality controls and capacity commitments. Fabrication availability must be part of the business case.
- Qualify for the vehicle lifetime. Run reliability and environmental tests, validate failure modes, document traceability and prove that production variation stays within safety limits.
- Design for reuse and fallback. Specify compatible revisions, alternate sources or a migration path so one wafer, package or supplier failure does not stop every vehicle line.
- Measure the result honestly. Compare the completed design with a qualified supplier alternative on whole-system energy, compute performance, software effort, warranty exposure, supply continuity and total lifecycle cost.
Supply resilience without owning a chip design
Many automakers can gain substantial control without creating silicon. A semiconductor database that links each component to vehicle programs improves the speed of a substitution review. Direct purchasing can expose allocation and inventory earlier than a multi-tier chain. Long-term capacity agreements can reserve output for mission-critical devices. Standardizing packages and reducing unnecessary variants can shorten validation and simplify software.
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The costs and risks that are easy to underestimate
- Nonrecurring engineering: Architecture, verification, masks, software enablement and safety documentation arrive years before revenue.
- Qualification time: Automotive environmental and reliability testing can delay a vehicle launch if requirements change late.
- Manufacturing dependence: Owning the design does not remove foundry, packaging, substrate, equipment or geographic risks.
- Lifecycle support: A chip may need security patches, errata management and replacement planning long after consumer electronics would be retired.
- Opportunity cost: Semiconductor specialists hired for a custom project are not available for other vehicle programs.
- Variant management: A bespoke part can increase, rather than decrease, software and service complexity unless it replaces several alternatives.
The available company statements explain intended benefits but do not quantify realized cost savings, performance gains or shortage reductions versus supplier-designed equivalents. Any investment case should therefore treat those outcomes as hypotheses to validate, not automatic consequences of “in-house” design.
A concise decision checklist
- Is the function visible in vehicle performance, safety, energy use or software architecture?
- Can the design be reused across enough models or brands?
- Would system-level co-optimization produce a measurable result?
- Can the automaker fund semiconductor engineering and automotive qualification?
- Would direct sourcing, standardization or a capacity contract address the risk instead?
- Is there a credible foundry, packaging and second-source plan?
- Can the chip be supported through the full service life?
- What evidence will demonstrate value against a qualified supplier alternative?
Automakers build or control chips selectively because the semiconductor sits at the intersection of vehicle capability, software, energy efficiency and supply risk. The approach makes sense when those intersections create durable value at platform scale and the automaker can carry the engineering and lifecycle responsibilities. For ordinary functions, disciplined procurement and supplier partnerships usually provide control without the burden of owning a custom design.
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