Hyundai Motor, Korea's top automaker, is investing more into in-vehicle semiconductors as a new order prevails in the global automotive industry amid industries' convergence.

The automotive group is aiming to realize "vertical integration" between vehicles and relevant components to cut costs and to grab leverage in the heated race for connected vehicles.

IA, a consortium led by former Hyundai Motor Vice Chairman Kim Dong-jin, was chosen as the preferred negotiator for the sale of Dongbu HiTek. HiTek is a semiconductor affiliate of Dongbu Group and specializes in non-memory chips.

"Because the major stakeholder of the consortium is a former Hyundai executive, the consortium's bidding for the Dongbu unit is aimed at helping Hyundai boost its profile in in-vehicle semiconductors," said an official at a Hyundai affiliate by telephone.

The consortium has been teaming up with Hyundai Motors, Kia Motors, Hyundai Mobis and Hyndai Autron for the development of in-vehicle semiconductors to cut Korea's heavy reliance on automotive chips from overseas suppliers.

"The key point is how Hyundai Motor Group can diversify its chip sourcing channels for connected vehicles. The IA consortium is set to handle Hyundai's in-vehicle semiconductors if it successfully acquires the Dongbu unit. That means Hyundai Autron may manufacture automotive chips based on designs by the IA," the official added.

The move comes after the automotive group has been hiring an increasing number of semiconductor experts from SK hynix and Samsung Electronics under the corporate vision _ future cars are all about connections that require high-quality memory chip technology.

Semiconductors used for vehicles have become essential parts for future cars such as eco-friendly concept vehicles or self-driven cars, as semiconductors play a key role.

Automotive chips are tough to produce as they must pass severe safety tests. Korea is far ahead in memory chips; however, the automotive chip industry is controlled by foreign suppliers such as Infineon Technologies of Germany.

"Domestic automakers have been relying on foreign suppliers, as more than 90 percent of components related to active safety technology such as lane departure warning systems (LDWS) and lane keeping assist systems (LKAS) were imported as of 2012," said Cho Soo-hong, a technology analyst at Woori Investment and Security.

Hyundai Motor is seeking to be self-sufficient when it comes to chip technology, as global tech giants are showing great interest in connected vehicles.

A Hyundai official said ongoing moves to strengthen its automotive chip portfolio are due to the growing interest by Internet giant Google and others into "set-making segments," threatening existing players.

In January, Google unveiled aself-driving car without any manual controls. The company also disclosed its vision for smart cars by saying some day its vehicles will be better drivers than many humans who drive today's cars.

"Future smart cars are not the business of only traditional car makers any more. That's why we have tried to secure our own advanced technology for non-memory chips rather than relying on foreign companies," a Hyundai Motor Group spokesman said.

By: DocMemory
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