Hyundai Motor Group is in talks with South Korean chip companies to help it reduce reliance on foreign supplies amid a global shortage that has halted assembly lines at automakers around the world, four people familiar with the matter told Reuters.
Hyundai officials have met with local “fabless” firms – which design chips but outsource manufacturing to the likes of TSMC and Samsung Electronics Co Ltd – as it explores long-term strategies to better diversify its supply. chain, according to two people at local fabless firms who met with Hyundai.
The South Korean auto group, which houses Hyundai Motor Co and Kia Corp , wants to shift chips such as microcontroller units (MCUs) to South Korean designers, the people said.
Such a shift would be hard, though, because local technology still lags industry leaders such as Dutch automotive chip supplier NXP Semiconductors and Japan’s Renesas Electronics Corp , industry experts said.
“On top of facing high entry barriers to the auto chip market, long and strict qualification processes make it more difficult for smaller chip companies to design auto chips,” said a person at a South Korean fabless company.
“It would take four to five years to supply auto chips, while it could take less than one year for designing and producing chips for home appliances,” the person said.
“The company is pursuing plans to” localize “auto chips in a bid to diversify supply chains in South Korea after experiencing chip sourcing issues, mostly caused by suppliers being outside the country,” said a person at Hyundai’s sister company, Kia.
The South Korean automaker group houses Hyundai Motor Co and Kia Corp .
Hyundai has fared better than global rivals in the first quarter, thanks to its efforts to stockpile chip inventories in anticipation of tighter supplies.
But the shortage, exacerbated by factors including a fire at a chip factory in Japan and storms in Texas, is catching up with Hyundai. read more
The company has suspended production at its South Korean factories as well as its production in the United States due to chip shortages. read more
The sources all spoke on the condition of anonymity because the discussions were private.
Hyundai Motor Group declined to comment.
Hyundai Mobis, the group’s parts company, said in a statement to Reuters: “There are no on-going discussions with relevant companies, and while we think it is necessary to review chip development in the long term, there are Currently no detailed directions or specific push concerning the issue. “
