Korean Companies Set to Localize Automotive Semiconductors

A new car has 800-1,000 semiconductors, which carry out diverse functions ranging from folding and unfolding side mirrors, communicating between vehicles and providing multimedia services. The advent of a smart car era will sharply increase the importance of these automotive semiconductors.

It is no coincidence then that Korea, which has relied on imports for these computer chips, appears set to localize them. The government plans to reduce Korean automakers’ dependency ratio of more than 90 percent on the United States, Japan and Europe, and expand the domestic makers’ share in global markets. IK Semicon, a “fabless” (fabrication-less) semiconductor company, which designs but does not make, chips, has supplied motor-controlling IC products to GM Korea and Hyundai Motor Group, according to industry sources. The company, which has recruited many executives and employees from the former LG Semiconductor, managed to win the supply contract after five years of effort and has also been involved in some government-initiated projects. Silicon Works, a fabless affiliated with the LG Group, has mass produced automotive sensors and supplied them to automakers here and abroad since 2014. The company plans to promote its automotive semiconductor business as a new growth engine and aims to increase related sales to at least 100 billion won ($81 million) by 2018, or 10 percent of its total turnover. iA, which has designed automotive semiconductors and supplied them to Hyundai Motor, is also pushing to reach its annual sales target of 10 billion won this year.

In addition, Hyundai Autron, a Hyundai Motor Group subsidiary, is setting up a department responsible for designing automotive semiconductors, reflecting the rising interest in this business sector among major business groups, the sources said. Dongbu Hitek, meanwhile, is pushing to launch a foundry that manufacturers automotive semiconductors, in partnerships with the domestic fabless companies.

According to HIS, a market researcher, the automotive semiconductor market is expected
to top $30 billion this year and reach $40.7 billion in 2021. But domestic manufacturers have failed to come to the front in this growing business, in part because of the strong “trust factor,” which did not allow suppliers to be changed once contracts were signed. Automotive semiconductors must undergo a confidence test for more than 18
months, during which the suppliers must prove their products last far longer than chips for home use or industrial use, and attain a zero failure rate under diverse environments. “Domestic automakers have depended on foreign suppliers, including NXP, Infineon and Renesas, for more than 90 percent of their demands,” an industry executive said. The sources said Korea’s domestic businesses were too small in scale and did not have enough experience to compete with their foreign counterparts. To develop this sector more rapidly, large companies interested in this business — such as Samsung Electronics, LG Electronics, SK Hynix and Hyundai Motor — should team up with smaller, specialized semiconductor companies to reinvigorate the industrial ecosystem for automotive semiconductors, they added.

korean-machinery.com | Blog Magazine of korean-machinery, brands and Goods

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