Hyundai Motor initiated a plan to boost its domestic semiconductor production and reduce its reliance on imported semiconductors, targeting over 90% of its vehicle requirements.
With the advent of the electric vehicle era driving a surge in semiconductor demand, Hyundai Motor Group Chairman Chung Eui-sun has committed to significantly curbing dependence on foreign components to preempt future semiconductor supply chain disruptions.
According to reports from the Maeil Business Newspaper, Hyundai Motor has been engaged in discussions with several local IC design firms since early 2024 to explore opportunities for collaborative development of automotive semiconductors. This strategic move validates longstanding industry speculations about Hyundai Motor's strategic intent to increase its reliance on domestically sourced semiconductors.
Developing semiconductors in-house necessitates substantial investment and time. Hence, Hyundai Motor expects partnering with specialized IC design firms will expedite commercialization and foster a robust supply-demand ecosystem. Sources suggest that Hyundai Motor mandates stringent testing and verification protocols from its IC design collaborators to ensure product quality before manufacturing at South Korean wafer foundries.
Hyundai Motor predominantly procures automotive semiconductors from foreign suppliers, such as Infineon, NXP, Renesas, and STMicroelectronics.
The automotive semiconductor market is characterized by a handful of dominant players, rendering it relatively oligopolistic. The auto chip shortage triggered by COVID-19 precipitated soaring semiconductor prices and operational challenges for numerous automakers, prompting Hyundai Motor to contemplate bolstering domestic semiconductor production.
Moreover, Hyundai Motor's decision to launch an ambitious domestic semiconductor production initiative is underscored by the growing significance of semiconductor supply in the automotive sector. Hyundai Motor aims to cement its leadership position in the burgeoning mobility market by fortifying its access to stable automotive semiconductor supplies.
Compared to conventional internal combustion engine vehicles, electric vehicles, and autonomous driving technologies—poised to dominate the market—mandate an exponential increase in automotive semiconductor usage, exceeding tenfold the requirements of traditional vehicles. Amid the pandemic, auto chip supply disruptions triggered production halts and shipment delays of over a year, exacerbating sales woes for automakers. Consequently, Hyundai Motor is seizing control over automotive semiconductor production to mitigate such risks.
Furthermore, Hyundai Motor envisages that bolstering South Korea's domestic semiconductor capabilities can wield considerable bargaining power in negotiations with foreign automotive semiconductor suppliers.
Earlier announcements revealed Hyundai Motor's plans to source infotainment-related semiconductors from Samsung Electronics commencing 2025. With South Korea's indigenous automotive semiconductor utilization on the ascent, Hyundai Motor's medium- to long-term aspiration is to institute stable supply chain management (SCM) while nurturing a robust supply-demand ecosystem.
