Hyundai Motor aims to produce its own semiconductors
Hyundai Motor and Kia Corp. headquarters in Seoul / Courtesy of Hyundai Motor Group
By Kim Hyun-bin
Hyundai Motor Group is taking steps to advance beyond its traditional strength of automotive production and work on the development of some logic chips possibly for use in its mid-size vehicle lineup.
Global carmakers including Hyundai are facing more delays in the production of some models, while some vehicles are being delivered to customers with fewer options or missing features due to a worsening global semiconductor shortage. Such supply-and-demand mismatches are not expected to ease anytime soon, according to automotive industry analysts.
The current semiconductor shortage has prompted Hyundai Motor to spend money to produce certain types of computer chips on its own. Officials and sources say Hyundai hopes to test the feasibility of its own semiconductor strengths by rolling out some logic-based chips with its parts affiliate Hyundai Mobis.
According to a report released by the Korea Automobile Manufacturers Association (KAMA) on Sunday, local carmakers produced 761,975 vehicles during the third quarter of this year, which is the least since it made 760,121 in 2008, and is down 20.9 percent compared to the same period last year.
"In our case, we want to be able to develop our own chips within the group, so we are a little bit less dependent in a potential situation like this," Hyundai Global Chief Operating Officer Jose Munos said. "This takes a lot of investment and time, but this is something we're working on."
Hyundai Motor aims to recover its vehicle production to its original business target in the fourth quarter, while offsetting some of its production losses next year, he added.
There are currently 200 to 300 chips that go into the production of each vehicle. Because Hyundai is on track to diversify its electric vehicle (EV) lineup and put more focus on leveling up its driverless technology, the Korean carmaker is pressed to pay a hefty amount of money in return for sourcing custom chips.
In order to hedge investment risks, analysts say the company will partner with some foundry chip-making players. However, specifics such as the level of partnership and expected deliverables from the partnership have yet to be known.
“We announced the internalized development of our own chips in late March, but nothing has been set on which products or direction the company plans to take at the moment,” a Hyundai Mobis official said, Sunday. Hyundai Mobis acquired affiliate Hyundai-Autron's semiconductor business for 133.2 billion won ($112.5 million) late last year.
Industry officials say, therefore, that Hyundai will start by localizing chips that require a lower level of technologies, such as power semiconductors, systems on a chip (SoC) and chips for advanced driver assistance systems (ADAS).