As the United States and China move ahead on commercializing self-driving cars, automotive semiconductors are emerging as a key field for strengthening the competitiveness of South Korea's auto industry. Building up automotive chips would reduce reliance on foreign suppliers for core future-mobility technology while also driving growth in the country's fabless chip design, foundry and back-end packaging sectors.
The global automotive semiconductor market is projected to grow at an average annual rate of 11.4%, from $77.4 billion (about 102.6 trillion won) last year to $133 billion (about 176.3 trillion won) in 2030, according to market researcher MarketsandMarkets on the 21st. Growth in segments tied to autonomous driving and advanced driver assistance systems (ADAS) is even faster at 15.6% a year. Gartner has forecast that the value of semiconductors in a single vehicle will rise to $1,902 in 2034 from $860 in 2024, as chips take on bigger roles in processing information for self-driving cars and controlling power in electric vehicles. Lee Kyu-seok, president of Hyundai Mobis (012330), said flatly that the volume of automotive chips needed will keep growing and that their share of the overall semiconductor market will rise as well.
Foreign companies dominate the market, however. Global market shares last year, as compiled by TechInsights, were led by Germany's Infineon at 12.8%, followed by the Netherlands' NXP at 9.6% and U.S.-based Texas Instruments at 7.8%. Korean companies, by contrast, accounted for a combined share of only about 5% among the world's 100 largest automotive chipmakers. That figure includes automotive memory chips; counting only system chips, the Korean presence is even smaller.
Korean companies find it hard to enter the market because of the high barriers to commercialization. Automotive chips must operate for years through extreme temperature swings and vibration, requiring them to pass demanding validation tests. Even when a fabless firm develops a chip, mass production is difficult without production and testing facilities and an automaker willing to adopt the product. Automakers, for their part, are reluctant to pick chips with no supply track record.
Joint development between chipmakers and the companies that buy their products is seen as a way through. Under that approach, automakers and parts suppliers specify the performance and volumes they need, fabless firms design the chip, and foundries produce it. If packaging, performance testing and in-vehicle validation are linked into the process, fabless firms gain a first customer and a mass-production record, while foundries and back-end firms secure new work. Automakers, in turn, can diversify their chip suppliers and develop semiconductors tailored to their vehicles.
Efforts to build up automotive chips are gathering pace in Korea as well. Hyundai Mobis said last year it planned to mass-produce 20 million units of 16 in-house-designed chips used in power supply, drive systems and communications. Telechips (054450) is developing in-vehicle infotainment chips, and Nextchip (396270) is working on image processing and recognition semiconductors.
Korean foundries also stand to benefit. At DB HiTek (000990), high-value products such as automotive and industrial chips rose to 30% of its output in the first quarter of this year from 22% in the same period last year. SK keyfoundry developed a silicon carbide (SiC) power semiconductor process in March. Its first order is for industrial use, but the technology provides a base for expanding into automotive applications.
Design and production know-how built up in automotive chips can be extended to robotics and artificial intelligence data centers. Motor control and image recognition chips are used in humanoid robots, while high-efficiency power semiconductors go into AI data centers and energy storage systems (ESS). Yole Group has forecast that the global SiC power semiconductor market will grow at an average annual rate of 20% from 2025 to 2031, reaching $11 billion (about 14.6 trillion won).
The key question is how far large auto parts companies will expand opportunities for validating and mass-producing domestic chips. Hyundai Mobis has set a goal of raising the share of locally made automotive semiconductors it uses to more than 10% by 2030, from under 5% last year. Kim Kyung-ho, chairman of the Korea Fabless Industry Association, said that if large companies combine their own intellectual property with chips developed by domestic fabless firms, they can secure proprietary semiconductors while also helping those firms grow. "Entrusting design to capable domestic fabless companies kills two birds with one stone — it grows the industrial ecosystem and reduces supply risk," he said.