Li Auto spins out chip and silicon carbide businesses to target outside customers
Li Auto is spinning off its in-house chip and silicon carbide businesses, Mach chips and Sike Semiconductor, to attract external customers and capital. The Mach M100 chip, already in mass production for Li Auto’s vehicles, offers 1,280 TOPS of computing power. Sike Semiconductor, a joint venture with Sanan Semiconductor, began operating independently in early 2026. Li Auto’s range extender system is also available to third parties. The move comes as Li Auto reported a net loss of RMB 3.994 billion in the first half of 2026, with gross margins at 9.4%.
Li Auto's decision to spin out its chip and silicon carbide units points to deeper financial pressure, beyond new revenue streams. The company faced a net loss of RMB 3.994 billion in H1 2026, a sharp drop from a RMB 1.743 billion profit a year prior. Its gross margin fell to 9.4%, far below CEO Li Xiang's healthy range of 15-20%. This is a direct response to a challenging market, not simply a growth play.
The move mirrors Nio's strategy, which spun out its chip business, GeniTech, in 2025. GeniTech raised RMB 2.257 billion in its first funding round. Li Auto's success will depend on overcoming the trust barrier of selling to competitors. Sike Semiconductor, 70% owned by Li Auto, must truly separate its operations. Bringing in external capital and broadening ownership will be key for Sike's IPO plans.
The test for Li Auto's Mach chip business is whether embodied intelligence companies can port their algorithms effectively. The Mach M100's design for vision-language-action models could attract startups. However, Li Auto’s identity as an automaker remains an obstacle. The market will watch if Li Auto can replicate GeniTech's funding success and secure major external customers by late 2027.
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