Volkswagen Group plans to design and develop advanced automotive chips in China through CoolCore, a joint venture between its software unit CARIAD and Horizon Robotics, the company said on Wednesday at the 8th China International Import Expo in Shanghai.

The move marks a deepening of Volkswagen’s localization strategy in its largest market, as the German automaker accelerates efforts to strengthen its technological footprint amid intensifying competition from domestic EV makers.

The new system-on-chips (SoCs) will deliver computing power of 500 to 700 TOPS per chip and are expected to enter mass production within three to five years, Volkswagen said.

Han Sanchu, CEO of CARIAD China, called the project a strategic investment of about US$200 million, aimed at boosting the company’s capability to integrate software and hardware for intelligent and connected vehicles.