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South Korea’s Hyundai Talking Local Chipmakers To Reduce Foreign Dependence

South Korea’s Hyundai Talking Local Chipmakers To Reduce Foreign Dependence
Within a global shortage of chips, the South Korean auto giant Hyundai Motor Group is talking with domestic chip companies for reducing its reliance on foreign supplies of chips, said reports quoting sources with knowledge of the matter. The chip shortage globally has forced many auto makers to halt production and assembly lines all around the world.
Hyundai is trying to set a long term strategies of better diversifying its supply chain and officials of the company have already met with local "fabless" firms - which design chips but its manufacturing is outsourced to companies such as TSMC and Samsung Electronics Co Ltd, said reports quoting the sources.
Sources said that the South Korean auto group wants to shift chips such as microcontroller units (MCUs) to South Korean designers.
But according to industry experts, achieving such a target will be hard for Hyundai because the technology for making such chips is still much less developed among the local players compared to the industry leaders such as Dutch automotive chip supplier NXP Semiconductors and Japan's Renesas Electronics Corp.
"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," a person at a South Korean fabless company was quoted in a local report as saying. "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 reportedly 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 of the country," said a sources at Hyundai's sister firm, Kia.
The South Korean automaker group houses Hyundai Motor Co and Kia Corp comprise the South Korean auto group.
In the first quarter of the current year, the global chip shortage has hit Hyundai less than the its global rivals primarily because of the company stockpiling chip inventories to address a potential tightness in their supplies. 
However factors such as storms in Texas and a fire at a chip factory in Japan have exacerbated the global shortage which is now starting to affect Hyundai. The shortage of chips has forced the company to suspend manufacturing at its South Korean factories as well as its production in the United States.
There were no comments on the issue from Hyundai Motor Group.
"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," said Hyundai Mobis, the group's parts company, in a statement to the news agency Reuters.
According to reports, chip makers, known as foundries, have also been approached by Hyundai for potentially setting up manufacturing units in South Korea. Fabless firms of South Korea such as Silicon Works and Telechips, and foundry owners such as DB HiTek also of the country could start to work wioht the car maker, said analysts, but also noted that it was possible that Hyundai may to have had talks with these companies.  
"Hyundai presented its plans to produce in-house chips, but we haven't pinned down any specifics yet ... when it comes to expanding our production capacity, we need to make investment," said a sport quoting a person at one of the foundries in South Korea. "Hyundai seems to believe that there would be enough or even strong demand for auto chips even after this recent chip shortage resolves," the person reportedly added.

Christopher J. Mitchell

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