Horizon Robotics Faces Deepening Losses as Chip Giants Close In and Clients Go In-House
Chinese autonomous driving chip company Horizon Robotics reported a widening loss of 5.23 billion yuan (US$723 million) for the first half of 2025, up from 5.1 billion yuan a year earlier, despite revenue growth of 67.6%. The company faces mounting pressure from international semiconductor giants entering the automotive market and key clients developing their own chips.
The Beijing-based firm's adjusted operating loss surged 34.9% to 1.11 billion yuan (155million)as research and development expenses jumped. Sales costs soared 177% to 543 million yuan as the company scaled up production of its Journey 6 processor-based solutions.
Major clients that accounted for 60% of revenue last year now represent just 12% of sales, highlighting the volatility in Horizon's customer concentration. The company's largest client from 2024, which contributed 37.6% of revenue, dropped to 11.2% this year.
The challenges underscore broader difficulties facing Chinese chip companies as they compete against established players like Nvidia and Qualcomm, while simultaneously losing market share to automakers developing proprietary solutions.
Revenue Growth Masks Profitability Struggles
Horizon's revenue climbed to 1.567 billion yuan in the first half, driven by automotive product solutions that generated 778 million yuan, a 250% increase from the previous year. The average selling price of products with built-in Journey 6 processors reached 1.7 times the prior year level, while delivery volumes more than doubled.
However, the automotive licensing and services business, which contributed 738 million yuan in revenue, saw gross margins decline from 93% to 89.7% as clients increasingly integrated Horizon's intellectual property into their own software stacks. Overall gross margins fell 13.7 percentage points to 65.4%.
The company has accumulated losses exceeding 17.5 billion yuan from 2021 to 2023, with deficits of 2.064 billion yuan, 8.72 billion yuan and 6.739 billion yuan respectively. Administrative expenses rose 26.3% to 307 million yuan, while sales and marketing costs increased to 272 million yuan from 198 million yuan.
Technology Gap Widens Against Global Leaders
Despite heavy R&D investment, Horizon lags behind international competitors in chip manufacturing processes. While Nvidia, Qualcomm and Intel showcase 4nm and 5nm automotive chips expected to enter mass production within two years, Horizon and other Chinese firms remain at the 7nm stage as of late August.
At CES 2025, Qualcomm demonstrated AI-powered in-vehicle experiences and advanced driver assistance systems based on its Snapdragon Digital Chassis, emphasizing low power consumption and high integration. The platform supports over 30 Chinese automotive brands across vehicles priced from 60,000 to 340,000 yuan.
Nvidia's partnerships span nearly all major global automakers including Waymo, ZOOX, Toyota and BYD. The technological gap limits Horizon's ability to compete for high-end vehicle clients requiring superior computing power, constraining its premium market expansion.
Client Self-Reliance Threatens Market Share
Automakers are increasingly developing proprietary chips, further pressuring Horizon's business model. BYD has adopted a hybrid approach through its "Eye of God" solution, combining Horizon chips with self-developed algorithms, reducing dependence on Horizon's software licensing revenue.
Li Auto, one of Horizon's core clients, reportedly completed sample testing of its self-developed M100 autonomous driving chip in the first quarter, passing functionality, performance and stress tests. The chip has entered small-batch vehicle testing phases.
While Horizon holds a 32.4% market share in China's autonomous driving computing solutions for domestic brands, its client base remains limited compared to international rivals. The company's top five customers generated 52.48% of revenue in the first half, with the largest single client accounting for 19.7%.
Customer Concentration Risks Mount
Horizon's dependence on major clients has intensified over time. From 2021 to the first half of 2024, its top five customers contributed between 53.2% and 77.9% of total revenue, while the largest single client's share grew from 24.7% to 37.6%.
The concentration exposes Horizon to significant risks if key clients reduce business volumes due to strategic shifts or financial difficulties. Large customers typically possess strong bargaining power, demanding preferential pricing and flexible payment terms that compress profit margins.
Industry analysts warn that client business instability is already materializing, as evidenced by major customers from 2024 dramatically reducing their revenue contributions this year. The volatility threatens Horizon's growth trajectory as it competes against better-capitalized international rivals while navigating the automotive industry's shift toward in-house chip development.