SEOUL: As the global shortage of semiconductors continues, South Korean car manufacturer Hyundai Motor Group has decided to produce its own automotive chips.
The automaker is now stepping up its plans on making their own chips through its auto parts affiliate, Hyundai Mobis.
The move is seen as part of a strategy to cope with semiconductor supply shortage risks, which has made the internal production of semiconductors more important than ever before, especially with the transition to electric vehicles (EV).
According to a Korea Times report, semiconductors have become a key determinant in the competitiveness of future cars because EVs and autonomous vehicles require more than 500 to 1,000 semiconductors.
In comparison, internal combustion cars use three times less.
Hyundai Mobis had announced last month that it planned to develop and produce automotive semiconductors.
"We are focusing on power semiconductors and are in the process of developing and producing them. We also see system semiconductors as an area of development," the company said.
The report said that power semiconductors, developed and produced by Hyundai Mobis, is one of the key components that can extend the driving range of EVs, while high-performance semiconductors are necessary parts of autonomous driving and artificial intelligence (AI).
Currently, six companies, including Renesas of Japan, NXP of the Netherlands, Infineon of Germany, Texas Instruments and Microchip of the United States, and ST Microelectronics of Switzerland supply 90 per cent of the world's automotive system semiconductors.
South Korean companies account for only around two per cent of the market. There have been very few new players in the sector, as product cycles and warranty periods are long, while profitability is lower than high-performance memory semiconductors.
Meanwhile, in another development, the South Korean government has been urged to help manufacturers swiftly digitise as a way to tackle global supply chain disruptions and soaring costs of raw materials.
Government research organisation Korea Institute for Advancement of Technology (KIAT) said easy and quick exchanges of key data between large conglomerates and their small and medium-sized enterprise peers will help bolster the industries' competitive advantage.
According to the Korea Times, KIAT said an early and effective transition to digital processes could be an important breakthrough to overcome the looming crisis in manufacturing, which is the country's growth driver, accounting for almost 28 per cent of the nation's gross domestic product (GDP).
The institute said South Korea should study how the US, Japan, and the European Union (EU) used different approaches tailored to the size, capabilities and sustainability of individual firms.
It added that South Korea should improve the level of public services, backed by strengthening of the country's infrastructure, that will be needed especially for small market players with limited access to costly high-tech resources.
Citing Germany, KIAT said the country ran non-profit entities including research bodies and technology innovation centers, to help coach small enterprises in order to transform the entire inter-firm network.
A similar digital center had also been set up by Singapore to foster integrated policy assistance with science and technology consulting agencies in the country.
It said the approach by the US in this matter was best summarised by the Innovation Competition Act, which includes providing federal funding for the Internet of Things (IoT) and 5G to accelerate the digital transformation of manufacturing.
The US government has also invested some US$1.3 billion in long-term funding for high-tech research and development to support applied high-technologies in manufacturing from 2012 to last year. About US$442 million was allocated for industrial technology services this year.
KIAT said there were 16 manufacturing innovation research institutes in 13 US states, with their areas of expertise including the development and advancement of digital manufacturing, new materials, manufacturing network security and robots.
It said the EU plans a long-term budget of 1.21 trillion euros from 2021 to 2027 to provide stable funding for cloud computing, big data and artificial intelligence.