Hyundai uses local companies to obtain tokens to diversify the supply chain Automotive industry news


Hyundai Motor Group is in talks with chip companies in South Korea to help reduce its dependence on foreign supplies amid a global shortage that has halted assembly lines for automakers around the world, they said. four people familiar with the matter told Reuters.

Hyundai officials have met with local “fabless” companies that design chips but outsource manufacturing to TSMC and Samsung Electronics Co. Ltd. as they explore long-term strategies to better diversify its supply chain, according to two people from the fabless local businesses that met with Hyundai.

The South Korean automotive group wants to move some of its automated chip orders, such as microcontroller units (MCUs), to South Korean designers, but the technology is still lagging behind industry leaders, such as supplier Dutch Automotive Chips NXP Semiconductors and Japanese Renesas Electronics Corp. people.

“In addition to facing high barriers to entry into the auto chip market, long and strict rating processes make it more difficult for smaller chip companies to design auto chips … it would take four to five years to to supply automatic chips, while it could take less than a year to design and produce chips for home appliances, ”said a person from a fabless South Korean company.

“The company is pursuing plans to ‘locate’ car chips with the aim of diversifying supply chains in South Korea after experiencing chip sourcing problems, mainly caused by suppliers outside the country,” he said. a person from Hyundai’s sister company, Kia.

The South Korean carmakers group houses Hyundai Motor Co. and Kia Corp.

Tighter supplies

Hyundai has outperformed global rivals in the first quarter, thanks to its efforts to store chip inventories in anticipation of tighter supplies.

But the shortage, exacerbated by factors such as a fire at a chip factory in Japan and storms in Texas, is catching up with Hyundai.

The company has suspended production from its South Korean factories as well as production in the United States due to a shortage of chips.

All sources spoke on 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 ongoing discussions with relevant companies and while we believe it is necessary to review the development of chips in the long term, there is currently no has detailed guidance or specific impetus on the subject “.

Local companies

While exploring ways to secure chip designs from local companies without fabless, Hyundai has also contacted contracted chip makers, known as foundries, to discuss possible manufacturing plans, a person familiar with Reuters told Reuters. the question.

“Hyundai presented its plans to produce internal chips, but we have not yet detailed any details … when it comes to expanding our production capacity, we need to invest,” said the person of one of the foundries of South Korea.

“Hyundai seems to believe that there would be enough or even a strong demand for auto chips even after resolving this recent lack of chips,” the person added.

The global chip shortage is expected to extend into the second quarter of 2022, according to research firm Gartner.

Analysts noted that foundries do not like to expand production capacity for specific customers because it can take years to recoup spending on equipment and capital investment, and demand can change rapidly.

“Our chips may not become major Hyundai chips or replace those already in use, but ours could be Hyundai’s solution in times of supply shortages or disruption to supply chains. foreigner, ”said a senior official of a company without fables.

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