"Domestic Production Rate of Automotive Semiconductors at 2%... Car-Semiconductor Collaboration Needed"

FKCCI Holds Seminar on 'K-Mobility Global Parts Supply Trends and Response Directions'
Vehicle Semiconductor Supply Shortage, Possibility of 'New Normal'... "Public-Private and Inter-Industry Cooperation Needed to Increase Localization Rate"

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] As the global automotive industry faces a 'shutdown' crisis due to the shortage of automotive semiconductors, opinions have been raised that the localization rate of automotive semiconductors, currently only 2%, should be increased through the division of roles between the public and private sectors and collaboration between the automotive and semiconductor industries.

The Federation of Korean Industries (FKI) held a seminar titled 'K-Mobility Global Parts Supply Trends and Response Directions' on the morning of the 28th at the FKI building in Yeongdeungpo-gu, Seoul. Vice Chairman Kwon Tae-shin of FKI and Kim Jun-gyu, Chairman of the Korea Automobile Industry Association's Steering Committee, attended the seminar.

Recently, the global automotive industry has experienced significant production disruptions due to the shortage of automotive semiconductors. South Korea is no exception, with Hyundai Motor, Korea GM, and Ssangyong Motor suspending parts of their production lines. The industry estimates that the global automotive production disruption in the first quarter reached between 900,000 and 1,000,000 vehicles.

At the seminar, it was analyzed that this shortage of automotive semiconductors could become the 'New Normal.' Although the supply issue may be somewhat resolved in the second half of this year, the demand is expected to steadily increase as global automakers focus on electrification.

Jin-woo Kim, an analyst at Korea Investment & Securities, said, "Currently, the lead time from order to delivery of automotive semiconductors has extended from 12-16 weeks to 26-38 weeks, so supply is expected to ease somewhat in the second half of the year," adding, "Since tight supply will be the new normal for the time being, it is necessary to diversify semiconductor procurement strategies in the mid to long term."

He emphasized that in preparation for the normalization of the automotive semiconductor shortage, the localization rate should be expanded through the division of roles between the public and private sectors and inter-industry cooperation. This is because there are limits to the automotive industry's internalization of automotive semiconductors, and the complex supply chain of automotive semiconductors must be considered. For example, the image sensor for the camera of the Ioniq 5 is connected in a complex manner across Italy (wafer), Taiwan (packaging and testing), Singapore (storage), China (assembly), and Korea (partners and automakers).

Analyst Kim stated, "The latest processes with economic feasibility should be led by the private sector, while the government should support older processes with investment incentives as infrastructure," adding, "In particular, older processes are areas where Korea's small and medium-sized enterprises can relatively easily acquire technology." He further added, "Through government support for the automotive semiconductor industry, this crisis should be used as an opportunity to foster the domestic non-memory semiconductor ecosystem, and future vehicle competitiveness should be secured through organic cooperation between the automotive and semiconductor industries."

This content was produced with the assistance of AI translation services.