Samsung takes detour to support automotive chips
Thousands of Hyundai Motor vehicles waits to be exported outside Hyundai Ulsan plant. Yonhap
By Kim Yoo-chul
By Kim Yoo-chul
After Samsung Electronics' chief foundry chip rival TSMC said it will prioritize boosting its automotive chip supply in a bid to ease the current global shortage, Samsung is assisting its local partner to develop mid-tier automotive chips.
Rather than directly producing automotive chips at its manufacturing facilities in South Korea ― automotive chips are viewed as less-profitable and something that has high technology barriers to entry with heavy switching costs ― Samsung is producing microcontroller units (MCUs) designed by its local fabless partner company of Telechips on a contract basis at its foundry facilities.
Samsung has no specific plans to reallocate production capacity in a possible bid to increase its automotive chip supply in response to the global shortage, as the country's trade ministry requested TSMC's clients, including Netherlands-based NXP Semiconductors, to supply more chips to Korean carmakers.
MCUs are one of the key components of vehicles. South Korea's position in the MCU industry is negligible as this market is dominated by Japanese companies including Renesas Electronics and Fujitsu. But under the continued shortages of MCUs and other chip components that have been causing plant shutdowns and extending “lead times” for flagship vehicle models, Samsung plans to expand its support programs helping its local partners fine-tune MCU technology.
“From a business standpoint, automotive MCUs aren't profitable as their functionality is limited and not expandable. But because of the continued mismatches on the supply-and-demand side, Telechips has outsourced work to Samsung to roll out automotive MCUs on a large scale,” an industry executive said by telephone, Thursday.
But automotive chips are closely linked to the safety of drivers and that means these chips have long replacement periods and high development costs.
Major car manufactures have increasingly become reliant on chips ― for everything from better management of engines for better fuel economy to driver-assistance features such as emergency braking, according to market analysts.
Regarding the adaptability of Samsung-assisted MCUs, Hyundai Motor Group's parts affiliate Hyundai Mobis said it's been reviewing the possibility of using locally developed MCUs. Since 2011, the local MCU designer has been supplying processor chips for vehicle navigation systems for Hyundai Motor cars and it recently started selling advanced in-vehicle navigation processor chips using a finer 10-nanometer level technology for Hyundai's Genesis GV80 and GV70 models.
“Hyundai Mobis is reviewing a lot of scenarios in order to secure more inventory via collaboration with local suppliers,” a Hyundai Mobis said. Samsung is said to have been supplying semiconductors for use in Tesla's driverless vehicles.