Author: Fang Yuan
In the summer of 2026, a historic extreme heatwave swept across the European continent. Temperatures in multiple countries, including France, Germany, and the United Kingdom, exceeded 40°C, with at least 101 million people in Europe exposed to temperatures above 35°C on June 28 alone. The high temperatures brought not only a public health crisis—according to the World Health Organization, over 1,300 heat-related deaths have occurred in Europe since June 21 alone—but also triggered an unexpected air conditioner buying frenzy. The French government urgently procured 30,000 air conditioners, demanding delivery within days, while consumers drove 200 kilometers just to secure the last unit in stock.
However, the true protagonist of this "air conditioner frenzy" is not the air conditioners themselves, but the chips hidden deep within every machine. As portable air conditioners sell out completely across Europe and Chinese home appliance manufacturers rush to replenish inventory, upstream power semiconductors and Power Management ICs (PMICs) are experiencing a strong wave of stockpiling. Almost simultaneously, home appliance giant LG Electronics announced its official entry into the ASIC design services market, with its first product being a 6nm process robot vacuum cleaner SoC (System on Chip). White goods chips—a sector long viewed by the capital market as having "mature processes, low gross margins, and low barriers to entry"—are now entering the industry's spotlight with a remarkably aggressive posture.
01 Chip Market Fueled by the Heatwave
Europe has long had a low air conditioner penetration rate, with household penetration below 3% in Germany and only about 5% in the UK. In the past, Europeans relied on fans, sunshades, and nighttime ventilation to cope with the heat, making air conditioners far from a necessity. However, the normalization of extreme climates is completely changing this landscape. From January to May 2026, the number of household air conditioners exported from China to Western Europe increased by 9.7% year-on-year, among which the export of portable air conditioners surged by over 70% year-on-year. Midea's PortaSplit portable split air conditioner has already sold over 200,000 units this year, doubling last year's figures; TCL air conditioners saw a year-on-year growth of over 300% in the French market.
The explosion in terminal demand is transmitting upstream. At the 2026 electronica China (Munich Shanghai Electronica) exhibition, Semtech Electronics revealed to the author that the company is currently supplying top-tier air conditioner brands such as Haier and Hisense, with orders for power devices accelerating significantly this year. As a "Little Giant" (nationally certified Chinese niche SMEs with strong core technology) enterprise specializing in the R&D of discrete semiconductor devices, Semtech Electronics's power MOSFETs, diodes, and other products are deeply embedded in the domestic white goods supply chain. Inverter air conditioners have much higher requirements for power devices than traditional fixed-frequency models—the usage of power devices in an inverter air conditioner is 30% to 50% higher than in traditional fixed-frequency models. Driven by high energy efficiency standards such as the European ErP directive, the penetration rate of inverter air conditioners continues to rise, causing the demand growth rate for power devices to surpass the growth in complete machine shipments.
A deeper change lies in the fact that the European market's perception of air conditioners is shifting from non-essential goods to survival necessities. High temperatures have transformed from occasional weather events into public health risks. As the frequency of extreme heat increases, the demand for cooling equipment, power control, and energy management systems is expected to continue expanding, allowing power semiconductors and mature process supply chains to benefit in the long term. For white goods chips, the release of demand in the European market is equivalent to opening up a completely new incremental space—a market that was almost blank in the past and is now being rapidly filled.
02 Connectivity + AI Drives the Upgrade of Home Appliance Chips
Beyond air conditioners, the comprehensive penetration of smart homes is also paving a second growth curve for white goods chips. Since the beginning of this year, the demand for smart home chips has accelerated significantly, driven by the superposition of multiple factors, including the AI boom, rising raw material prices, surging oil prices, and the Middle East conflict.
Let's first look at the changes in the connectivity layer. NXP's recently launched UWB/BLE/NFC three-in-one hands-free solution is a sample worth analyzing. This solution supports the Aliro standard, with a maximum sensing distance of up to 30 meters, and supports three unlocking methods: UWB seamless approach, BLE active interaction, and NFC tap-to-unlock. According to relevant sources, Aqara is already using it, with many overseas partners and particularly high demand in Europe; demand has grown rapidly since the beginning of this year.
The official rollout of the Aliro standard is a key catalyst. This protocol, launched by the Connectivity Standards Alliance, specifically addresses cross-brand interoperability issues for smart devices, is compatible with three transmission technologies, and is deeply integrated with the Matter ecosystem. NXP itself is one of the standard setters, and the solution has passed Aliro 1.0 certification. The U400 smart lock released by Aqara at CES in January 2026 is precisely the terminal implementation of this technical architecture.
However, the significance of this case extends beyond just the access control category. It reflects a core trend in smart home chips: the integration of connectivity technology and AI capabilities is redefining "what makes a good chip." A combined solution of a UWB transceiver plus BLE, NFC, and a secure element has a significantly higher per-unit BOM cost than a standard Bluetooth solution, but terminal manufacturers are calculating a different set of accounts—differentiated user experience, ecosystem interoperability compatibility, and the potential for subsequent OTA value-added services. This logic of using more expensive chips to deliver better experiences is penetrating from the high-end market downwards.
On a more macro level, the advancement of the Matter standard is restructuring the chip demand structure for the entire smart home industry. In the past, smart home chip procurement was fragmented—one chip for lighting, one for security, and one for home appliances, each running its own protocol. Matter requires unified connectivity across categories and brands, which means chips must pre-load multiple connectivity protocol stacks at the hardware level and support unified device pairing and control logic at the software level.
From a technical roadmap perspective, smart home chips are undergoing an iteration from functional to intelligent. Traditional home appliance chips are mainly responsible for basic functions such as inverter control and temperature sensing, while the new generation of smart home chips needs to handle tasks across four levels simultaneously: connectivity, perception, control, and edge AI. This poses entirely new requirements for chip architecture—it is no longer just a simple MCU (Microcontroller Unit) plus a communication module, but requires the deep integration of heterogeneous computing, multi-protocol concurrency, and hardware-level security.
HiSilicon's launched embedded AI chip Hi3066M and Gree's exhibited EAI chip (dual Cortex-M4F + NPU triple-core heterogeneous) both point in the same direction: single-chip integration of AI accelerators is becoming the standard configuration for white goods chips. Gree revealed that its EAI chip has shipped nearly 10 million units cumulatively in fields such as air conditioners and HMI smart displays, and its dynamic energy-saving technology can achieve a 23% power saving throughout the year.
It can be said that smart homes are becoming the largest application scenario for edge AI chips after smartphones. Moreover, unlike mobile phone chips that pursue the limits of process nodes, smart home chips place more emphasis on integration optimization, power consumption control, and development ecosystems under mature processes—this is precisely the area where domestic chip companies have the opportunity to catch up.
03 Competing on Price or Competing on Total Lifecycle Cost?
Regarding the procurement logic for white goods chips, there are two completely different narratives.
One narrative comes from international giants. STMicroelectronics states that semiconductors cannot be judged solely by the price of a single chip; one must look at the cost of an entire solution—R&D, secondary development, maintenance, and upgrades all cost money. They use the STM32H5F5LJ-DK development board as an example, which originally required 6886KB of storage space but can be directly reduced to 641KB after optimization and compression. Saving RAM means a lower-cost storage solution can be used, while also saving customers a significant amount of secondary development investment. Furthermore, the commitment to "10 years of stable supply" is of great significance for long-lifecycle products like home appliances—the discontinuation of a single chip could lead to a redesign of the entire product line, and its hidden costs are far higher than the procurement price difference of the chip itself.
This logic certainly holds up on paper. But the question is, its applicability in the Chinese market is questionable.
The profit structure of domestic white goods manufacturers determines their high sensitivity to the price of a single chip. The net profit of an air conditioner might only be a few dozen RMB; if the chip procurement cost increases by just 0.1 RMB, multiplied by annual shipments of several million units, it results in hundreds of thousands of RMB in evaporated profits. Under this cost structure, "total lifecycle cost" is something that sounds great but is easily placed second during decision-making—procurement departments are evaluated on this year's BOM costs and will not pay in advance for the risk of production discontinuation that might occur ten years from now.
Table: Overview of Global Home Appliance Chip Manufacturers
This is also one of the core reasons why domestic chips can quickly penetrate the white goods supply chain. Chipown's AC-DC Power Management ICs (PMICs) cost about 0.1 to 0.3 RMB per unit, which is 15% to 20% cheaper than imported counterparts, with little difference in performance. In mature categories like air conditioners and refrigerators, the selection decision for a PMIC is very simple: meets functions, stable delivery, and cheap price—which one to choose is obvious at a glance.
However, the first half of domestic substitution is indeed nearing its end. The domestic substitution rate for analog chips is about 90%, and for power semiconductor devices, it has exceeded 70%. The next tough challenges to tackle are higher-value categories such as MCUs, DSPs, and heterogeneous SoCs. In these categories, the advantages of international giants are precisely what ST emphasizes—the maturity of the development ecosystem (the STM32 ecosystem has almost become the industry's default reference frame), the reliability of long-term supply, and performance redundancy under extreme working conditions.
There is a subtle misalignment here: the total solution cost narrative of international giants poses no threat to domestic manufacturers in categories with low technical barriers, because customers simply do not need so much ecosystem and service; but in high-end categories, this narrative is indeed persuasive, because if a main control MCU has a problem, the loss of an entire production line shutting down is far greater than the procurement price difference.
Therefore, the real landscape of the white goods chip industry today is the coexistence of two sets of logic. In high-volume categories such as power devices, analog chips, and low-end MCUs, price is the decisive factor, and domestic manufacturers have firmly established their foothold. In high-quality categories such as high-end main controllers, motor control DSPs, and AI acceleration chips, solution completeness, development ecosystem, and supply guarantee are the core barriers, and international giants still maintain a clear advantage.
This landscape will not fundamentally change in the short term. But there are several variables worth paying attention to.
The first is the demand changes brought by AI. The requirement for edge AI chips is not to be cheaper, but to have sufficient computing power, low power consumption, and fast development. Among these, domestic chips are catching up in computing power and power consumption, but the biggest gap lies in the development toolchain and software ecosystem—and this gap takes time to bridge; it cannot be quickly filled just by throwing money at it.
The second is the trend of terminal manufacturers making their own chips. White goods giants like LG, Gree, and Midea getting into chipmaking themselves are essentially trying to take back control of total solution costs. When terminal brands simultaneously become chip definers, the competitive logic for external chip suppliers will shift from selling a single chip to providing chip design services—which places higher, not lower, demands on the development ecosystem.
The third is supply chain uncertainty. The remark mentioned by Zhongke Haoxin—"everyone raises prices when prices go up, but can you deliver?"—implies that when the capacity utilization rate is tight, foundries prioritize orders from large customers. Domestic chip companies do not get the same capacity priority as international giants, which puts them at a disadvantage when scrambling for supply. Conversely, domestic chip companies that have established stable foundry partnerships and have capacity commitments may instead gain a trust premium from customers during this round of volatility.
04 Stop Buying Chips, Start Making Them!
The case of LG Electronics is the most representative. According to South Korean media, LG Electronics has begun to provide chip design services externally. Its first product is a 6nm SoC customized for a South Korean fabless company, manufactured by TSMC (Taiwan Semiconductor Manufacturing Company), which will subsequently be repurchased by LG Electronics and equipped in its robot vacuums. LG Electronics already possesses an IP portfolio up to 6nm, with a target to extend to the 3nm process node by 2029.
LG's unique advantage in doing this lies in its simultaneous possession of terminal product definition capabilities and chip engineering implementation capabilities. Compared to pure fabless companies, it has a clearer understanding of the real constraints of terminal products—how much power consumption is needed, how many sensor interfaces are required, and how the software stack should run. Compared to traditional design service providers, it has an internal validation platform—once the chip is made, it is first installed on its own products to run through tests; if problems are found, it fixes them itself without waiting for customer feedback. This "system manufacturer defines the chip" model is becoming a new paradigm in the white goods chip industry.
There are similar trends domestically. Gree has launched its self-developed electronic control ASIC chip, specifically for motor control, supporting sensorless FOC algorithms, and has actual shipments in fields such as air conditioners and HMI smart displays. Midea builds whole-home smart solutions by combining its self-developed AIoT semiconductor chips with sensor networks. TCL and Hisense also have their own chip layouts, although the depth varies.
Putting these things together, the signal is very clear. White goods chips used to be standard parts bought according to specification sheets; now, complete machine manufacturers are getting involved to define chips themselves, use them themselves, and even sell them to others—the relationship between complete machine manufacturers and chip design companies is no longer a simple "you design, I procure." The entire rules of the game are changing. This is both a challenge and an opportunity for independent chip design companies. The challenge lies in the fact that terminal customers have increasingly customized demands, and the market space for standard products may be compressed. The opportunity lies in the fact that companies that can provide flexible customization services and possess sufficient IP reserves and design experience will become partners in the process of complete machine manufacturers extending upstream, rather than being bypassed.
A noteworthy comparison is that LG's model of providing ASIC design services is essentially opening up its chip design capabilities accumulated over more than 20 years to the outside world. In contrast, the chip layouts of domestic home appliance enterprises are currently still mainly for internal use, with limited openness to the outside. Behind this, there are both gaps in capability accumulation and differences in strategic choices. But the direction is consistent—chips are becoming a component of the core competitiveness of the white goods industry, rather than just a randomly replaceable part in the supply chain.