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| SsangYong Motor workers are assembling a car engine at the company's Pyeongtaek plant in Gyeonggi Province, in this file photo. Korea Times file |
By Kim Yoo-chul
The global tech and automotive industries are still reeling from a shortage of semiconductor chips, with demand for automotive chips outstripping supply. This supply-demand mismatch has directly impacted major carmakers.
Hyundai Motor Group is not immune to this crisis, as the country's top vehicle manufacturer has lost a considerable amount of production volume, halting production amid the continuing automotive chip shortage. With no end in sight, carmakers will continue to be affected for some time to come.
Hyundai Motor is stressing the need for a self-sufficient and vertically integrated structure, from components to finished goods, to avoid further shortages, according to officials and sources involved with the issue, Thursday.
"Hyundai Motor is apparently aiming to take supply chain resilience into its own hands. Also, the central point is that Hyundai Motor plans to strengthen its capability to design components and apply technology as a strategy to increase the role of semiconductors in its manufacturing process," a high-ranking industry executive said.
Hyundai Mobis, the automotive group's component affiliate, is said to have been involved in selecting local fabless production lines and components designers as an initial step to produce its own automotive semiconductor chips, according to sources.
They said Hyundai Mobis signed non-disclosure agreements (NDA) with some companies in which it is interested in order to maintain secrecy. The primary goal set internally by Hyundai Mobis is to develop its own MCU, PMIC and ADAS technologies, which are considered crucial in vehicle infotainment systems.
Regarding the possibility of collaboration with local suppliers to internalize automotive chip technology, Hyundai Motor said it's on track to explore the best opportunities. But it didn't specify the names of any local suppliers it is talking with.
Such efforts do make sense as any supply chain disruption could gravely impact Hyundai's vehicle pipeline strategies. However, the issue is that its vertical integration initiatives may clash with the group's existing automotive chip clients.
"The reason is simple. Because carmakers have long been procuring automotive semiconductors from specialized clients such as Infineon Technologies and NXP Semiconductors, their efforts to reduce their reliance on chip-sourcing by internalizing automotive chip-making technologies could limit access to product development at other companies," another industry executive said.
This is similar to the complicated Samsung-Apple relationship. Samsung is Apple's chief competitor, but the South Korean tech behemoth is also one of Apple's important parts suppliers. Apple designs its flagship products and lets its suppliers in Asia provide the necessary components.
According to the "2021 Apple Supplier List," Samsung Electronics, Samsung Electro-Mechanics and Samsung SDI were its top parts suppliers. In 2011, when Apple sued Samsung arguing that the rival copied the look and feel of the iPhone, Apple insisted Samsung is positioned to share its product development strategies with other business units, helping them access confidential information to release Samsung products in advance.
"No global carmakers want to see cracks form in their longtime tie-ups with automotive chip suppliers. However, the continued chip shortage is a good excuse to justify efforts to internalize related technologies. It seems quite risky, but it is one that is worth taking in the long term," the second source said.
According to an analysis by Stephen Dyer at AlixPartners in Shanghai, there are up to 1,400 chips in a typical vehicle today. But that number will only increase as the industry continues advancing towards electric vehicles (EVs) and, in the long term, self-driving vehicles.
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