Hyundai Motor Bets on Localizing Automotive Semiconductors as China Chases With Self-Driving SoCs, Pushing Supply Chain Diversification

Hyundai Motor and Kia are accelerating efforts to localize automotive semiconductors and diversify their supply chains. With China raising its price competitiveness by producing even self-driving systems-on-chip (SoCs) in-house, the two South Korean automakers aim to reshape a structure dependent on a handful of foreign companies to secure both cost competitiveness and supply stability.

Hyundai Motor disclosed the semiconductor strategy on the 21st at the second Hyundai Mobis automotive semiconductor forum, “Auto Semicon Korea (ASK),” held at the DoubleTree by Hilton Seoul Pangyo in Seongnam, Gyeonggi Province. Kim Jong-sun, managing director of Hyundai Motor’s semiconductor development office within its AVP division, said, “China has now entered an era where it makes even self-driving SoCs itself and mounts them in vehicles,” adding, “It is time for us to take another look at ourselves in terms of development speed and cost competitiveness.”

The automotive semiconductor market is effectively controlled by a small number of foreign companies. According to 2025 market share data compiled by research firm Omdia, the top five companies account for 74% of the automotive SoC market and 88% of the market for microcontrollers (MCUs) that control vehicle functions. Automotive converters are even more concentrated, with the top five holding 96%: U.S.-based Texas Instruments (TI) at 43% and Analog Devices (ADI) at 42%, meaning just these two companies control 85% of the market. In image sensors, Samsung Electronics holds a mere 5% share.

The global market is growing rapidly. Research firm MarketsandMarkets projected that the global automotive semiconductor market will expand from $77.4 billion last year to $133 billion by 2030, a compound annual growth rate of 11.4%. Growth in autonomous driving and advanced driver assistance systems (ADAS) is even faster at 15.6% a year. Gartner forecast that the semiconductor content per vehicle will rise from $860 in 2024 to $1,902 in 2034.

Note: Market size figures are from MarketsandMarkets; per-vehicle semiconductor content figures are Gartner forecasts.

South Korean companies, however, hold a narrow position. According to TechInsights, last year’s global market shares were led by Germany’s Infineon at 12.8%, the Netherlands’ NXP at 9.6% and Texas Instruments at 7.8%. Among the world’s top 100 automotive semiconductor companies, South Korean firms’ combined share is around 5%. Because that figure includes automotive memory chips, the South Korean share is even lower when counting system semiconductors alone. Lee Kyu-seok, president of Hyundai Mobis, said, “The volume of automotive semiconductors we need keeps growing, and their share of the overall semiconductor market will rise as well.”

Barriers to entry are also formidable. Automotive semiconductors must operate for long periods under extreme temperature swings and vibration, so they must pass demanding validation. Even if a fabless company designs a chip, mass production is difficult without production and testing facilities and automakers willing to adopt it—and automakers are reluctant to accept chips with no track record of supply.

Hyundai Motor’s answer is specification standardization and supplier diversification. The plan is to design semiconductors from multiple suppliers to be interchangeable, reducing reliance on any single company and cutting development costs and parts-management burdens. The automaker will also expand joint development with South Korean semiconductor companies. It will share required performance and schedules from the early stages of new vehicle development and conduct validation together for real-world application, and will participate as a demand-side company in government R&D projects to ease the development burden on South Korean firms.

Such cooperation is growing more important as vehicles’ electronic and electrical architectures change. Previously, separate semiconductors controlled each vehicle function, but the industry is shifting toward integrating functions around a central controller. Hyundai Motor identified high-performance control semiconductors, power management semiconductors and automotive communication chips as areas where South Korean companies can make new inroads.

In power semiconductors, a key component of electric vehicles, China’s advance is seen as a direct threat. Joo Jung-hong, managing director of Hyundai Motor’s electrification design center, said, “Currently, European companies such as Infineon and ST are strong in automotive SiC power semiconductors,” adding, “But what deserves more attention is China. Based on government support, China is rapidly building a vertically integrated ecosystem stretching from SiC wafers to semiconductor devices and modules.”

Hyundai Motor assessed that European companies lead in quality while Chinese companies show strengths in price and supply capacity. The judgment is that South Korean companies must secure price competitiveness along with technological prowess. Power semiconductors account for 40-60% of the cost of a power module, so they are directly tied not only to efficiency but also to vehicle price competitiveness. Hyundai Motor and Kia are expanding the application of next-generation silicon carbide (SiC) semiconductors, which reduce power loss, from 800V systems to 400V systems, starting with the Ioniq 5 and EV6 in 2021.

South Korea’s ecosystem is also gaining momentum. Hyundai Mobis announced last year a plan to mass-produce 20 million units of 16 types of in-house designed semiconductors used in power, drive and communication applications. South Korea’s Telechips (054450) is developing automotive infotainment chips, while Nextchip (396270) is developing image processing and recognition semiconductors. On the foundry side, the share of high-value-added products such as automotive and industrial chips at South Korea’s DB HiTek (000990) rose from 22% in the first quarter of last year to 30% in the first quarter of this year, while SK Key Foundry developed a silicon carbide (SiC) power semiconductor process in March. Its first order is for industrial use, but the company is seen as having secured the technological base to expand into automotive applications.

Design and production capabilities built in automotive semiconductors extend to robots and artificial intelligence (AI) data centers. Motor control and image recognition semiconductors can be used in humanoid robots, while high-efficiency power semiconductors can be used in AI data centers and energy storage systems (ESS). Yole Group projected that the global SiC power semiconductor market will grow at an average annual rate of 20% from 2025 to 2031 to reach $11 billion.

The key question is how widely automakers and major parts companies will open up validation and mass-production opportunities for South Korean-made chips. Hyundai Mobis set a goal of raising the localization rate of automotive semiconductors, which was below 5% last year, to more than 10% by 2030. Kim Kyung-ho, chairman of the Korea Fabless Industry Association, said, “If a major company combines its own design assets (IP) with semiconductors developed by South Korean fabless firms, it can secure proprietary semiconductors while also nurturing fabless companies,” adding, “Entrusting design to capable South Korean fabless firms has a two-for-one effect of growing the industrial ecosystem and reducing supply risks.”