GS Paper III

News Excerpt:

Up to 2018, the global LiDAR (Light Detection and Ranging) market was dominated by US companies, but now, one Chinese firm alone accounts for 47 percent of the global market share.

More details about news:

• The rapid advancements in automated systems and vehicles have led to a growing demand for increasingly sophisticated sensor technology. This has enabled another emerging technology to progress remarkably and come into prominence, namely, Light Detection and Ranging (LiDAR). 
• While the demand for LiDAR systems is being primarily driven by autonomous vehicles, it is finding applications in a wide assortment of fields, both commercial and military. 
• This has, however, inadvertently resulted in China acquiring a sizeable portion of the market in this domain, an issue which is now raising serious national security concerns around the world, particularly in the United States (US).

About LiDAR:

• LiDAR is an emerging, dual-use, remote sensing technology that uses light in the form of a pulsed laser to measure distances and map the surrounding environment. 
• Unlike radar (Radio Detection and Ranging), which uses microwaves, and sonar (Sonic Navigation and Ranging), which uses sound waves, the use of reflected light in case of LiDAR provides greater speed, precision and resolution in mapping, though all three technologies use the same basic principle of emitting energy waves to detect and track objects. 
• LiDAR also offers an advantage over cameras, since it can work in any lighting condition and has a better detection range.   
• Though the first commercially available LiDAR system came out in 2008, earlier devices were expensive, bulky and required frequent maintenance. 
• It was the increasing interest in autonomous vehicles that spurred significant technological developments in the field and have now enabled it to become more powerful, efficient and cost-effective. 
• The combination of LiDAR with artificial intelligence platforms has also allowed enhanced object recognition and classification, allowing the technology to evolve even further. 

Applications of LiDAR:   

• Advanced driver-assistance systems (ADAS) and autonomous vehicles like self-driving cars use 3D LiDAR map data to navigate roads and other environments. LiDAR also provides sensing capabilities for lane-keeping and collision avoidance. 
• The automotive industry constitutes the bulk of the demand for the technology with global automotive LiDAR revenues estimated to be US$ 332 million in 2022. Tesla alone purchased over US$ 2 million worth of LiDAR equipment from manufacturer Luminar earlier this year. 
• LiDAR is used in agriculture to monitor crop conditions and soil health. 
• It is used in weather forecasting to measure temperature, cloud cover, air density and other atmospheric parameters. 
• It is also used in geology and mining for mapping and surveying landscapes.
• Smart cities pair LiDAR with other technologies to integrate sensor networks in utilities, transportation and infrastructure. 
• Additionally, LiDAR also has applications in manufacturing, construction, forestry, aviation, bathymetry and energy. 
• In the military domain, LiDAR is being used to support autonomous navigation capabilities for uncrewed ground and aerial vehicles. These can be used to conduct battle damage assessment, thereby eliminating the need for military personnel to be physically present on the battlefield.

China’s growing dominance and rising US security concerns:

• Up to 2018, the global LiDAR market was dominated by US companies. However, Chinese technology firms like Hesai, Robosense, Seyond and Livox have been rapidly expanding into international markets since then, including the US, thanks to the support of the Chinese Communist Party’s (CCP) industrial policies, including tariffs and subsidies, under its overlying strategy of civil-military fusion. Hesai alone accounts for 47 percent of the global market share by sales revenue.
• Chinese companies are subject to the country’s National Security Law, under which they must provide any available data collected by their products and systems to the CCP as and when required. This raises serious national security risks for the US since it implies that Chinese intelligence could potentially access vast amounts of data on US mapping and infrastructure, as well as on US military systems, or conduct cyberattacks such as introducing malware via software updates that could degrade the performance of US systems and critical infrastructure relying on Chinese LiDAR equipment. 
• Furthermore, most commercial LiDAR sensors require Field Programmable Gate Array (FPGA) semiconductor chips to work. The FPGA chips typically used in LiDAR systems are not subject to export controls under the US Department of Commerce's Bureau of Industry and Security (BIS). Thus, there is the added concern that Chinese LiDAR companies are using US-made FPGAs to build their systems, which are potentially being used in the PRC military’s autonomous vehicle systems. 

The US response:

• In January 2024, the US Department of Defence (DoD) placed Hesai on its 1260H list of “Chinese military companies.” The 1260H list is an effort by the DoD to identify contributors to the PRC’s civil-military fusion strategy, operating directly or indirectly in the US. This is a notable inclusion since Hesai is not just the first LiDAR manufacturer, but also the first publicly traded company on the US stock exchange to be added to the list. 
• In March 2024, the BIS issued a proposed rule to identify information and communications technology and services provided by foreign countries that are integral to autonomous vehicles, specifically citing lidar. 
• In May 2024, a US defence spending bill was advanced by the House of Representatives which contained a measure that would bar the US DoD from buying or using Chinese LiDAR equipment in US military systems.

Conclusion:

The ongoing initiative against Chinese LiDAR companies falls under the broader strategy of US decoupling from China, as highlighted by the CHIPS and Science Act of 2022. This also serves as a warning sign for nations like India, which is still heavily dependent on Chinese imports, and needs to further strengthen its manufacturing and industrial base if it is to phase out competition from subsidized Chinese companies, particularly when it comes to emerging and strategically important technologies like LiDAR.