By Kim Yoo-chul
Hyundai Motor has signed a deal with Intel, the world’s biggest semiconductor producer, to buy more advanced processors for its car infotainment systems, a source said Thursday.
The contract demonstrates Intel’s strategy of diversifying its business portfolio amid stalling growth of its traditionally-strong computer chip business.
“Under the deal, Intel’s Atom processor, currently being used in Hyundai’s Genesis and Equus sedans produced in China, will also be used for the same models made in Korea. Intel is very interested in boosting its car infotainment business,’’ an Intel official said.
The official declined to unveil further details, such as contract terms citing the sensitivity of the issue. Senior spokesman at Intel Korea W.H. Choi also refused to confirm the deal. Hyundai Motor officials also declined to comment.
Other Intel officials said the U.S.-based firm is seeking new cash-generators as its business structure is heavily dependent on the fluctuating PC business.
“Because Intel’s processors are very competitive, Hyundai Motor has no reason to refuse its offer to expand the partnership. Intel made us a good offer,” said other officials familiar with the project.
The Atom processor is speedy, helping passengers and drivers enjoy enhanced in-vehicle experience with location-based and social network services.
The business expansion comes two years after Hyundai Motor and its affiliate Kia Motors agreed with Intel to jointly develop an enhanced in-vehicle infotainment (IVI) platform in September 2011.
Hyundai has sharpened the system as demand has been on the rise in Korea and China.
“The Car infotainment system market is one Intel shouldn’t lose, “ the officials said, noting the chipmaker’s efforts to advance into embedded solutions for smartphones and tablets were not successful.
Like other chipmakers, Intel has struggled in recent years with a sluggish global economy and weak consumer spending. It has responded in part by cutting costs while trying to expand the use of its application processors in robotics and healthcare as well as in cars.
Last year, Intel saw a decline of 2.7 percent in its chip business from the previous year amid sluggish demand for PCs.
The officials said demand among automakers was good but “not huge.”
Texas Instruments and Freescale Semiconductor are currently leading producers of car infotainment chip solutions. Intel suffered a setback in its foray into the local car system business after Kia Motor decided not to use the Atom processor for its K9 luxury sedan.
Hyundai, led by founding family member Chung Mong-koo, is boosting sales in China after opening a new plant in the world’s biggest auto market as Japanese rivals reel from anti-Japanese sentiment.
The automaker aims to increase global sales by 6 percent to 4.66 million vehicles this year mainly boosted by the new plant in China and the rising demand for premium sedans embedded with technology-enriched features.