Hyundai turns to local companies to supply supply chain diversification chips Automotive News

Hyundai Motor Group is in talks with South Korean chip companies to help reduce confidence in foreign supplies due to a global shortage that has halted car assembly lines around the world, four people familiar with the matter told Reuters.

Hyundai officials have teamed up with local “wireless” companies – which design the chips but outsource manufacturing to companies like TSMC and Samsung Electronics Co Ltd – as they explore long-term strategies to better diversify the supply chain, according to two people from local fabless companies. He met with Hyundai.

The South Korean auto group wants to take some of its automated chip orders (such as microcontroller units (MCUs)) to South Korean designers, but the technology still lags behind industry leaders such as Dutch automotive chip supplier NXP Semiconductors and Japan’s Renesas Electronics Corp. people.

“In addition to being major barriers to access to the car chip market, long and rigorous qualification processes make it more difficult for small chip companies to design car chips … It would take four to five years to supply car chips, but less than a year to design and produce home appliance chips,” he said. by a person in a fabless company.

“The company is making plans to“ locate ”car chips with the aim of diversifying South Korean supply chains after chip supply problems, mainly because suppliers are out of the country,” said a person from the sister company Kia Hyundai.

South Korean automotive teams include Hyundai Motor Co. and Kia Corp.

Tighter supplies

Hyundai outperformed its global rivals in the first quarter, thanks to its efforts to store chip inventories in anticipation of tighter supplies.

But the shortage, including a fire at the Japanese chip factory and storms in Texas, has worsened with Hyundai.

The company has suspended production at factories in South Korea as well as U.S. production due to a shortage of chips.

All sources spoke on condition of anonymity because the discussions were private.

The Hyundai Motor Group declined to comment.

Hyundai Mobis, the group’s parts company, told Reuters, “There is no ongoing discussion with major companies, and although we believe it is necessary to review chip development in the long term, there is currently no specific direction or specific impetus on the issue.”

Local businesses

While studying ways to secure chip designs from local wireless companies, Hyundai Casting has also contacted manufacturers, known as foundries, to discuss potential manufacturing plans, a person familiar with the matter told Reuters.

“Hyundai presented its intention to produce home chips, but we have not yet determined the details … when it comes to expanding our production capacity, we need to make investments,” he said at one of the South Korean foundries. .

“Hyundai believes that the demand for car chips will be sufficient or even stronger even after the last chip shortage is fixed,” the person added.

According to research firm Gartner, the chip shortage will continue until the second quarter of 2022.

Analysts point out that foundries do not like expanding production capacity to specific customers because it takes years to recover equipment and capital investment spending and demand can change rapidly.

“Our chips may not become Hyundai’s main chips or replace those chips that are already in use, but ours may be Hyundai’s solution to supply chain shortages or outages abroad,” said a senior official at the fabless company.